Correlation Between Mercury Industries and Sungei Bagan
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and Sungei Bagan 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 Sungei Bagan 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 Sungei Bagan Rubber, you can compare the effects of market volatilities on Mercury Industries and Sungei Bagan 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 Sungei Bagan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and Sungei Bagan.
Diversification Opportunities for Mercury Industries and Sungei Bagan
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercury and Sungei is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Sungei Bagan Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungei Bagan 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 Sungei Bagan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungei Bagan Rubber has no effect on the direction of Mercury Industries i.e., Mercury Industries and Sungei Bagan go up and down completely randomly.
Pair Corralation between Mercury Industries and Sungei Bagan
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to generate 1.41 times more return on investment than Sungei Bagan. However, Mercury Industries is 1.41 times more volatile than Sungei Bagan Rubber. It trades about 0.31 of its potential returns per unit of risk. Sungei Bagan Rubber is currently generating about 0.2 per unit of risk. If you would invest 91.00 in Mercury Industries Bhd on October 20, 2024 and sell it today you would earn a total of 8.00 from holding Mercury Industries Bhd or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Industries Bhd vs. Sungei Bagan Rubber
Performance |
| Timeline |
| Mercury Industries Bhd |
| Sungei Bagan Rubber |
Mercury Industries and Sungei Bagan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and Sungei Bagan
The main advantage of trading using opposite Mercury Industries and Sungei Bagan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, Sungei Bagan 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 Sungei Bagan will offset losses from the drop in Sungei Bagan's long position.| Mercury Industries vs. Tex Cycle Technology | Mercury Industries vs. Binasat Communications Bhd | Mercury Industries vs. Magni Tech Industries | Mercury Industries vs. MI Technovation Bhd |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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