Correlation Between Mercury Industries and Carlsberg Brewery
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and Carlsberg Brewery 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 Carlsberg Brewery 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 Carlsberg Brewery Malaysia, you can compare the effects of market volatilities on Mercury Industries and Carlsberg Brewery 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 Carlsberg Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and Carlsberg Brewery.
Diversification Opportunities for Mercury Industries and Carlsberg Brewery
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mercury and Carlsberg is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Carlsberg Brewery Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg Brewery 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 Carlsberg Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg Brewery has no effect on the direction of Mercury Industries i.e., Mercury Industries and Carlsberg Brewery go up and down completely randomly.
Pair Corralation between Mercury Industries and Carlsberg Brewery
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to generate 2.38 times more return on investment than Carlsberg Brewery. However, Mercury Industries is 2.38 times more volatile than Carlsberg Brewery Malaysia. It trades about 0.23 of its potential returns per unit of risk. Carlsberg Brewery Malaysia is currently generating about -0.39 per unit of risk. If you would invest 91.00 in Mercury Industries Bhd on November 4, 2024 and sell it today you would earn a total of 6.00 from holding Mercury Industries Bhd or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Industries Bhd vs. Carlsberg Brewery Malaysia
Performance |
| Timeline |
| Mercury Industries Bhd |
| Carlsberg Brewery |
Mercury Industries and Carlsberg Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and Carlsberg Brewery
The main advantage of trading using opposite Mercury Industries and Carlsberg Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, Carlsberg Brewery 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 Carlsberg Brewery will offset losses from the drop in Carlsberg Brewery's long position.| Mercury Industries vs. Choo Bee Metal | Mercury Industries vs. Binasat Communications Bhd | Mercury Industries vs. YX Precious Metals | Mercury Industries vs. Berjaya Food Bhd |
| Carlsberg Brewery vs. Impiana Hotels Bhd | Carlsberg Brewery vs. CPE Technology Berhad | Carlsberg Brewery vs. Farm Price Holdings | Carlsberg Brewery vs. IHH Healthcare Bhd |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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