Correlation Between Mercurity Fintech and Solowin Holdings

Can any of the company-specific risk be diversified away by investing in both Mercurity Fintech and Solowin Holdings 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 Solowin Holdings 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 Solowin Holdings Ordinary, you can compare the effects of market volatilities on Mercurity Fintech and Solowin Holdings 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 Solowin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercurity Fintech and Solowin Holdings.

Diversification Opportunities for Mercurity Fintech and Solowin Holdings

-0.61

Correlation Coefficient

Mercurity Fintech  Solowin Holdings

Excellent diversification

The 3 months correlation between Mercurity and Solowin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mercurity Fintech Holding and Solowin Holdings Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solowin Holdings Ordinary 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 Solowin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solowin Holdings Ordinary has no effect on the direction of Mercurity Fintech i.e., Mercurity Fintech and Solowin Holdings go up and down completely randomly.

Pair Corralation between Mercurity Fintech and Solowin Holdings

Considering the 90-day investment horizon Mercurity Fintech Holding is expected to generate 3.13 times more return on investment than Solowin Holdings. However, Mercurity Fintech is 3.13 times more volatile than Solowin Holdings Ordinary. It trades about 0.23 of its potential returns per unit of risk. Solowin Holdings Ordinary is currently generating about -0.05 per unit of risk. If you would invest  121.00  in Mercurity Fintech Holding on September 12, 2024 and sell it today you would earn a total of  531.00  from holding Mercurity Fintech Holding or generate 438.84% return on investment over 90 days.

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

Mercurity Fintech Holding  vs.  Solowin Holdings Ordinary

Mercurity Fintech Holding

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mercurity Fintech Holding are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, Mercurity Fintech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Solowin Holdings Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solowin Holdings Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Mercurity Fintech and Solowin Holdings

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

The idea behind Mercurity Fintech Holding and Solowin Holdings Ordinary 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.