Correlation Between Mercantile Investment and Helios Towers

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

Diversification Opportunities for Mercantile Investment and Helios Towers

0.85

Correlation Coefficient

Mercantile Investment  Helios Towers

Very poor diversification

The 3 months correlation between Mercantile and Helios is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and Helios Towers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Towers Plc 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 Helios Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Towers Plc has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and Helios Towers go up and down completely randomly.

Pair Corralation between Mercantile Investment and Helios Towers

Assuming the 90 days trading horizon Mercantile Investment is expected to generate 1.07 times less return on investment than Helios Towers. But when comparing it to its historical volatility, The Mercantile Investment is 1.5 times less risky than Helios Towers. It trades about 0.19 of its potential returns per unit of risk. Helios Towers Plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  10,700  in Helios Towers Plc on April 24, 2025 and sell it today you would earn a total of  1,140  from holding Helios Towers Plc or generate 10.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

The Mercantile Investment  vs.  Helios Towers Plc

The Mercantile Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Mercantile Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Mercantile Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Helios Towers Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helios Towers Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Helios Towers may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Mercantile Investment and Helios Towers

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

The idea behind The Mercantile Investment and Helios Towers Plc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.