Correlation Between Mercury Industries and Batu Kawan
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and Batu Kawan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mercury Industries and Batu Kawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Industries Bhd and Batu Kawan Bhd, you can compare the effects of market volatilities on Mercury Industries and Batu Kawan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mercury Industries with a short position of Batu Kawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and Batu Kawan.
Diversification Opportunities for Mercury Industries and Batu Kawan
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mercury and Batu is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Batu Kawan Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batu Kawan Bhd and Mercury Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mercury Industries Bhd are associated (or correlated) with Batu Kawan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batu Kawan Bhd has no effect on the direction of Mercury Industries i.e., Mercury Industries and Batu Kawan go up and down completely randomly.
Pair Corralation between Mercury Industries and Batu Kawan
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to under-perform the Batu Kawan. In addition to that, Mercury Industries is 4.32 times more volatile than Batu Kawan Bhd. It trades about -0.19 of its total potential returns per unit of risk. Batu Kawan Bhd is currently generating about 0.07 per unit of volatility. If you would invest 1,980 in Batu Kawan Bhd on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Batu Kawan Bhd or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mercury Industries Bhd vs. Batu Kawan Bhd
Performance |
| Timeline |
| Mercury Industries Bhd |
| Batu Kawan Bhd |
Mercury Industries and Batu Kawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and Batu Kawan
The main advantage of trading using opposite Mercury Industries and Batu Kawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, Batu Kawan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Batu Kawan will offset losses from the drop in Batu Kawan's long position.| Mercury Industries vs. JAKS Resources Bhd | Mercury Industries vs. PESTECH International Bhd | Mercury Industries vs. Tadmax Resources Berhad | Mercury Industries vs. Ho Hup Construction |
| Batu Kawan vs. Southern Steel Bhd | Batu Kawan vs. Mercury Industries Bhd | Batu Kawan vs. CSC Steel Holdings | Batu Kawan vs. Melewar Industrial Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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