Correlation Between Astar and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Astar and Mercuries Life 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 Astar and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Mercuries Life Insurance, you can compare the effects of market volatilities on Astar and Mercuries Life 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 Astar with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Mercuries Life.
Diversification Opportunities for Astar and Mercuries Life
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Astar and Mercuries is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance and Astar 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 Astar are associated (or correlated) with Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Astar i.e., Astar and Mercuries Life go up and down completely randomly.
Pair Corralation between Astar and Mercuries Life
Assuming the 90 days trading horizon Astar is expected to generate 5.1 times more return on investment than Mercuries Life. However, Astar is 5.1 times more volatile than Mercuries Life Insurance. It trades about 0.01 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.03 per unit of risk. If you would invest 7.90 in Astar on November 2, 2024 and sell it today you would lose (2.93) from holding Astar or give up 37.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.83% |
| Values | Daily Returns |
Astar vs. Mercuries Life Insurance
Performance |
| Timeline |
| Astar |
| Mercuries Life Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Astar and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Mercuries Life
The main advantage of trading using opposite Astar and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life's long position.The idea behind Astar and Mercuries Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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