Correlation Between SANOK RUBBER and Merck
Can any of the company-specific risk be diversified away by investing in both SANOK RUBBER and Merck 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 SANOK RUBBER and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANOK RUBBER ZY and Merck Company, you can compare the effects of market volatilities on SANOK RUBBER and Merck 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 SANOK RUBBER with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANOK RUBBER and Merck.
Diversification Opportunities for SANOK RUBBER and Merck
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SANOK and Merck is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SANOK RUBBER ZY and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and SANOK RUBBER 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 SANOK RUBBER ZY are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of SANOK RUBBER i.e., SANOK RUBBER and Merck go up and down completely randomly.
Pair Corralation between SANOK RUBBER and Merck
Assuming the 90 days horizon SANOK RUBBER ZY is expected to generate 2.22 times more return on investment than Merck. However, SANOK RUBBER is 2.22 times more volatile than Merck Company. It trades about 0.18 of its potential returns per unit of risk. Merck Company is currently generating about 0.02 per unit of risk. If you would invest 453.00 in SANOK RUBBER ZY on October 13, 2024 and sell it today you would earn a total of 31.00 from holding SANOK RUBBER ZY or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANOK RUBBER ZY vs. Merck Company
Performance |
| Timeline |
| SANOK RUBBER ZY |
| Merck Company |
SANOK RUBBER and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANOK RUBBER and Merck
The main advantage of trading using opposite SANOK RUBBER and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANOK RUBBER position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.| SANOK RUBBER vs. The Boston Beer | SANOK RUBBER vs. De Grey Mining | SANOK RUBBER vs. Perseus Mining Limited | SANOK RUBBER vs. Japan Tobacco |
| Merck vs. SANOK RUBBER ZY | Merck vs. Martin Marietta Materials | Merck vs. MAGNUM MINING EXP | Merck vs. Vulcan Materials |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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