Correlation Between Mercator Medical and Novina SA
Can any of the company-specific risk be diversified away by investing in both Mercator Medical and Novina SA 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 Mercator Medical and Novina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercator Medical SA and Novina SA, you can compare the effects of market volatilities on Mercator Medical and Novina SA 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 Mercator Medical with a short position of Novina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercator Medical and Novina SA.
Diversification Opportunities for Mercator Medical and Novina SA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mercator and Novina is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mercator Medical SA and Novina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novina SA and Mercator Medical 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 Mercator Medical SA are associated (or correlated) with Novina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novina SA has no effect on the direction of Mercator Medical i.e., Mercator Medical and Novina SA go up and down completely randomly.
Pair Corralation between Mercator Medical and Novina SA
Assuming the 90 days trading horizon Mercator Medical SA is expected to generate 1.03 times more return on investment than Novina SA. However, Mercator Medical is 1.03 times more volatile than Novina SA. It trades about -0.14 of its potential returns per unit of risk. Novina SA is currently generating about -0.3 per unit of risk. If you would invest 5,400 in Mercator Medical SA on September 13, 2024 and sell it today you would lose (400.00) from holding Mercator Medical SA or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercator Medical SA vs. Novina SA
Performance |
| Timeline |
| Mercator Medical |
| Novina SA |
Mercator Medical and Novina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercator Medical and Novina SA
The main advantage of trading using opposite Mercator Medical and Novina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercator Medical position performs unexpectedly, Novina SA 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 Novina SA will offset losses from the drop in Novina SA's long position.| Mercator Medical vs. Echo Investment SA | Mercator Medical vs. LSI Software SA | Mercator Medical vs. Skyline Investment SA | Mercator Medical vs. mBank SA |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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