Correlation Between Mercurity Fintech and Riot Blockchain

Can any of the company-specific risk be diversified away by investing in both Mercurity Fintech and Riot Blockchain 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 Mercurity Fintech and Riot Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mercurity Fintech Holding and Riot Blockchain, you can compare the effects of market volatilities on Mercurity Fintech and Riot Blockchain 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 Mercurity Fintech with a short position of Riot Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercurity Fintech and Riot Blockchain.

Diversification Opportunities for Mercurity Fintech and Riot Blockchain

0.76

Correlation Coefficient

Mercurity Fintech  Riot Blockchain

Poor diversification

The 3 months correlation between Mercurity and Riot is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mercurity Fintech Holding and Riot Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riot Blockchain and Mercurity Fintech 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 Mercurity Fintech Holding are associated (or correlated) with Riot Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riot Blockchain has no effect on the direction of Mercurity Fintech i.e., Mercurity Fintech and Riot Blockchain go up and down completely randomly.

Pair Corralation between Mercurity Fintech and Riot Blockchain

Considering the 90-day investment horizon Mercurity Fintech Holding is expected to generate 0.79 times more return on investment than Riot Blockchain. However, Mercurity Fintech Holding is 1.26 times less risky than Riot Blockchain. It trades about 0.1 of its potential returns per unit of risk. Riot Blockchain is currently generating about -0.05 per unit of risk. If you would invest  122.00  in Mercurity Fintech Holding on February 1, 2024 and sell it today you would earn a total of  12.00  from holding Mercurity Fintech Holding or generate 9.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Mercurity Fintech Holding  vs.  Riot Blockchain

Mercurity Fintech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercurity Fintech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Riot Blockchain

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Riot Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Riot Blockchain is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mercurity Fintech and Riot Blockchain

The main advantage of trading using opposite Mercurity Fintech and Riot Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercurity Fintech position performs unexpectedly, Riot Blockchain 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 Riot Blockchain will offset losses from the drop in Riot Blockchain's long position.

The idea behind Mercurity Fintech Holding and Riot Blockchain 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.