Correlation Between Mercantile Investment and X FAB
Can any of the company-specific risk be diversified away by investing in both Mercantile Investment and X FAB 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 Mercantile Investment and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Mercantile Investment and X FAB Silicon Foundries, you can compare the effects of market volatilities on Mercantile Investment and X FAB 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 Mercantile Investment with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and X FAB.
Diversification Opportunities for Mercantile Investment and X FAB
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mercantile and 0ROZ is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and Mercantile Investment 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 The Mercantile Investment are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and X FAB go up and down completely randomly.
Pair Corralation between Mercantile Investment and X FAB
Assuming the 90 days trading horizon The Mercantile Investment is expected to generate 0.5 times more return on investment than X FAB. However, The Mercantile Investment is 1.99 times less risky than X FAB. It trades about 0.05 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.05 per unit of risk. If you would invest 19,140 in The Mercantile Investment on August 31, 2024 and sell it today you would earn a total of 4,510 from holding The Mercantile Investment or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.76% |
| Values | Daily Returns |
The Mercantile Investment vs. X FAB Silicon Foundries
Performance |
| Timeline |
| The Mercantile Investment |
| X FAB Silicon |
Mercantile Investment and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Investment and X FAB
The main advantage of trading using opposite Mercantile Investment and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Investment position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Mercantile Investment vs. Samsung Electronics Co | Mercantile Investment vs. Samsung Electronics Co | Mercantile Investment vs. Hyundai Motor | Mercantile Investment vs. Toyota Motor Corp |
| X FAB vs. Neometals | X FAB vs. Coor Service Management | X FAB vs. Aeorema Communications Plc | X FAB vs. JLEN Environmental Assets |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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