Correlation Between Neo Neon and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Neo Neon 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 Neo Neon and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neo Neon Holdings Limited and Mercuries Life Insurance, you can compare the effects of market volatilities on Neo Neon 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 Neo Neon with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Neon and Mercuries Life.
Diversification Opportunities for Neo Neon and Mercuries Life
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Neo and Mercuries is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Neo Neon Holdings Limited 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 Neo Neon 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 Neo Neon Holdings Limited 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 Neo Neon i.e., Neo Neon and Mercuries Life go up and down completely randomly.
Pair Corralation between Neo Neon and Mercuries Life
Assuming the 90 days trading horizon Neo Neon Holdings Limited is expected to under-perform the Mercuries Life. But the stock apears to be less risky and, when comparing its historical volatility, Neo Neon Holdings Limited is 1.38 times less risky than Mercuries Life. The stock trades about -0.07 of its potential returns per unit of risk. The Mercuries Life Insurance is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 481.00 in Mercuries Life Insurance on January 31, 2024 and sell it today you would earn a total of 92.00 from holding Mercuries Life Insurance or generate 19.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.0% |
Values | Daily Returns |
Neo Neon Holdings Limited vs. Mercuries Life Insurance
Performance |
Timeline |
Neo Neon Holdings |
Mercuries Life Insurance |
Neo Neon and Mercuries Life Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Neo Neon and Mercuries Life
The main advantage of trading using opposite Neo Neon and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Neon 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.Neo Neon vs. Hon Hai Precision | Neo Neon vs. Delta Electronics | Neo Neon vs. LARGAN Precision Co | Neo Neon vs. Yageo Corp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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