Correlation Between Mercantile Investment and Sabien Technology

Can any of the company-specific risk be diversified away by investing in both Mercantile Investment and Sabien Technology 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 Sabien Technology 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 Sabien Technology Group, you can compare the effects of market volatilities on Mercantile Investment and Sabien Technology 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 Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and Sabien Technology.

Diversification Opportunities for Mercantile Investment and Sabien Technology

-0.39

Correlation Coefficient

Mercantile Investment  Sabien Technology

Very good diversification

The 3 months correlation between Mercantile and Sabien is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and Sabien Technology go up and down completely randomly.

Pair Corralation between Mercantile Investment and Sabien Technology

Assuming the 90 days trading horizon The Mercantile Investment is expected to under-perform the Sabien Technology. But the stock apears to be less risky and, when comparing its historical volatility, The Mercantile Investment is 4.13 times less risky than Sabien Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Sabien Technology Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Sabien Technology Group on September 13, 2024 and sell it today you would earn a total of  350.00  from holding Sabien Technology Group or generate 46.67% return on investment over 90 days.

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

The Mercantile Investment  vs.  Sabien Technology Group

The Mercantile Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mercantile Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mercantile Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sabien Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabien Technology Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabien Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mercantile Investment and Sabien Technology

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

The idea behind The Mercantile Investment and Sabien Technology Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.