Correlation Between Mercury Industries and Kluang Rubber
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and Kluang Rubber 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 Kluang Rubber 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 Kluang Rubber, you can compare the effects of market volatilities on Mercury Industries and Kluang Rubber 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 Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and Kluang Rubber.
Diversification Opportunities for Mercury Industries and Kluang Rubber
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mercury and Kluang is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber 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 Kluang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kluang Rubber has no effect on the direction of Mercury Industries i.e., Mercury Industries and Kluang Rubber go up and down completely randomly.
Pair Corralation between Mercury Industries and Kluang Rubber
Assuming the 90 days trading horizon Mercury Industries is expected to generate 3.29 times less return on investment than Kluang Rubber. In addition to that, Mercury Industries is 1.57 times more volatile than Kluang Rubber. It trades about 0.01 of its total potential returns per unit of risk. Kluang Rubber is currently generating about 0.05 per unit of volatility. If you would invest 394.00 in Kluang Rubber on August 28, 2024 and sell it today you would earn a total of 176.00 from holding Kluang Rubber or generate 44.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.23% |
| Values | Daily Returns |
Mercury Industries Bhd vs. Kluang Rubber
Performance |
| Timeline |
| Mercury Industries Bhd |
| Kluang Rubber |
Mercury Industries and Kluang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and Kluang Rubber
The main advantage of trading using opposite Mercury Industries and Kluang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, Kluang Rubber 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 Kluang Rubber will offset losses from the drop in Kluang Rubber's long position.| Mercury Industries vs. Senheng New Retail | Mercury Industries vs. Alliance Financial Group | Mercury Industries vs. Kluang Rubber | Mercury Industries vs. Apex Healthcare Bhd |
| Kluang Rubber vs. YX Precious Metals | Kluang Rubber vs. Al Aqar Healthcare | Kluang Rubber vs. ONETECH SOLUTIONS HOLDINGS | Kluang Rubber vs. British American Tobacco |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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