Correlation Between Kool2play and Mercator Medical
Can any of the company-specific risk be diversified away by investing in both Kool2play and Mercator Medical 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 Kool2play and Mercator Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kool2play SA and Mercator Medical SA, you can compare the effects of market volatilities on Kool2play and Mercator Medical 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 Kool2play with a short position of Mercator Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kool2play and Mercator Medical.
Diversification Opportunities for Kool2play and Mercator Medical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kool2play and Mercator is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kool2play SA and Mercator Medical SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercator Medical and Kool2play 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 Kool2play SA are associated (or correlated) with Mercator Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercator Medical has no effect on the direction of Kool2play i.e., Kool2play and Mercator Medical go up and down completely randomly.
Pair Corralation between Kool2play and Mercator Medical
Assuming the 90 days trading horizon Kool2play SA is expected to under-perform the Mercator Medical. In addition to that, Kool2play is 1.01 times more volatile than Mercator Medical SA. It trades about -0.09 of its total potential returns per unit of risk. Mercator Medical SA is currently generating about -0.01 per unit of volatility. If you would invest 5,320 in Mercator Medical SA on September 12, 2024 and sell it today you would lose (210.00) from holding Mercator Medical SA or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.48% |
| Values | Daily Returns |
Kool2play SA vs. Mercator Medical SA
Performance |
| Timeline |
| Kool2play SA |
| Mercator Medical |
Kool2play and Mercator Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kool2play and Mercator Medical
The main advantage of trading using opposite Kool2play and Mercator Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kool2play position performs unexpectedly, Mercator Medical 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 Mercator Medical will offset losses from the drop in Mercator Medical's long position.| Kool2play vs. Movie Games SA | Kool2play vs. CI Games SA | Kool2play vs. Gaming Factory SA | Kool2play vs. True Games Syndicate |
| Mercator Medical vs. Echo Investment SA | Mercator Medical vs. LSI Software SA | Mercator Medical vs. Skyline Investment SA | Mercator Medical vs. mBank SA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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