Correlation Between Mercury Industries and Central Industrial
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and Central Industrial 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 Central Industrial 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 Central Industrial Corp, you can compare the effects of market volatilities on Mercury Industries and Central Industrial 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 Central Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and Central Industrial.
Diversification Opportunities for Mercury Industries and Central Industrial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mercury and Central is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Central Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Industrial Corp 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 Central Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Industrial Corp has no effect on the direction of Mercury Industries i.e., Mercury Industries and Central Industrial go up and down completely randomly.
Pair Corralation between Mercury Industries and Central Industrial
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to generate 1.49 times more return on investment than Central Industrial. However, Mercury Industries is 1.49 times more volatile than Central Industrial Corp. It trades about 0.22 of its potential returns per unit of risk. Central Industrial Corp is currently generating about -0.11 per unit of risk. If you would invest 91.00 in Mercury Industries Bhd on November 3, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Industries Bhd vs. Central Industrial Corp
Performance |
| Timeline |
| Mercury Industries Bhd |
| Central Industrial Corp |
Mercury Industries and Central Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and Central Industrial
The main advantage of trading using opposite Mercury Industries and Central Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, Central Industrial 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 Central Industrial will offset losses from the drop in Central Industrial's long position.| Mercury Industries vs. Aeon Credit Service | Mercury Industries vs. Malayan Banking Bhd | Mercury Industries vs. CPE Technology Berhad | Mercury Industries vs. Homeritz Bhd |
| Central Industrial vs. Cloudpoint Technology Berhad | Central Industrial vs. Pantech Group Holdings | Central Industrial vs. Systech Bhd | Central Industrial vs. Binasat Communications 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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