Correlation Between Mercury Industries and Malaysia Steel
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and Malaysia Steel 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 Malaysia Steel 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 Malaysia Steel Works, you can compare the effects of market volatilities on Mercury Industries and Malaysia Steel 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 Malaysia Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and Malaysia Steel.
Diversification Opportunities for Mercury Industries and Malaysia Steel
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mercury and Malaysia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Malaysia Steel Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaysia Steel Works 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 Malaysia Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaysia Steel Works has no effect on the direction of Mercury Industries i.e., Mercury Industries and Malaysia Steel go up and down completely randomly.
Pair Corralation between Mercury Industries and Malaysia Steel
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to under-perform the Malaysia Steel. In addition to that, Mercury Industries is 1.68 times more volatile than Malaysia Steel Works. It trades about -0.19 of its total potential returns per unit of risk. Malaysia Steel Works is currently generating about 0.01 per unit of volatility. If you would invest 31.00 in Malaysia Steel Works on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Malaysia Steel Works or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Industries Bhd vs. Malaysia Steel Works
Performance |
| Timeline |
| Mercury Industries Bhd |
| Malaysia Steel Works |
Mercury Industries and Malaysia Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and Malaysia Steel
The main advantage of trading using opposite Mercury Industries and Malaysia Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, Malaysia Steel 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 Malaysia Steel will offset losses from the drop in Malaysia Steel's long position.| Mercury Industries vs. YX Precious Metals | Mercury Industries vs. Kossan Rubber Industries | Mercury Industries vs. Binasat Communications Bhd | Mercury Industries vs. Aeon Credit Service |
| Malaysia Steel vs. PMB Technology Bhd | Malaysia Steel vs. Pantech Group Holdings | Malaysia Steel vs. CSC Steel Holdings | Malaysia Steel vs. Coraza Integrated Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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