Correlation Between Mercurity Fintech and Nomura Holdings

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

Diversification Opportunities for Mercurity Fintech and Nomura Holdings

-0.64

Correlation Coefficient

Mercurity Fintech  Nomura Holdings

Excellent diversification

The 3 months correlation between Mercurity and Nomura is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mercurity Fintech Holding and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of Mercurity Fintech i.e., Mercurity Fintech and Nomura Holdings go up and down completely randomly.

Pair Corralation between Mercurity Fintech and Nomura Holdings

Considering the 90-day investment horizon Mercurity Fintech Holding is expected to under-perform the Nomura Holdings. In addition to that, Mercurity Fintech is 4.48 times more volatile than Nomura Holdings ADR. It trades about -0.12 of its total potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.0 per unit of volatility. If you would invest  600.00  in Nomura Holdings ADR on February 8, 2024 and sell it today you would lose (2.00) from holding Nomura Holdings ADR or give up 0.33% of portfolio value over 90 days.

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

Mercurity Fintech Holding  vs.  Nomura Holdings ADR

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 uncertain 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.

Nomura Holdings ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Mercurity Fintech and Nomura Holdings

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

The idea behind Mercurity Fintech Holding and Nomura Holdings ADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.