Correlation Between Mercury Industries and Sime Darby
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and Sime Darby 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 Sime Darby 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 Sime Darby Plantation, you can compare the effects of market volatilities on Mercury Industries and Sime Darby 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 Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and Sime Darby.
Diversification Opportunities for Mercury Industries and Sime Darby
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mercury and Sime is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Sime Darby Plantation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Plantation 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 Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Plantation has no effect on the direction of Mercury Industries i.e., Mercury Industries and Sime Darby go up and down completely randomly.
Pair Corralation between Mercury Industries and Sime Darby
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to generate 2.33 times more return on investment than Sime Darby. However, Mercury Industries is 2.33 times more volatile than Sime Darby Plantation. It trades about 0.02 of its potential returns per unit of risk. Sime Darby Plantation is currently generating about 0.03 per unit of risk. If you would invest 93.00 in Mercury Industries Bhd on October 16, 2024 and sell it today you would earn a total of 4.00 from holding Mercury Industries Bhd or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Industries Bhd vs. Sime Darby Plantation
Performance |
| Timeline |
| Mercury Industries Bhd |
| Sime Darby Plantation |
Mercury Industries and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and Sime Darby
The main advantage of trading using opposite Mercury Industries and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby's long position.| Mercury Industries vs. Media Prima Bhd | Mercury Industries vs. Choo Bee Metal | Mercury Industries vs. Central Industrial Corp | Mercury Industries vs. SSF Home Group |
| Sime Darby vs. Mercury Industries Bhd | Sime Darby vs. Impiana Hotels Bhd | Sime Darby vs. Eonmetall Group Bhd | Sime Darby vs. Apex 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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