Correlation Between SIVERS SEMICONDUCTORS and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both SIVERS SEMICONDUCTORS and Merck KGaA 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 SIVERS SEMICONDUCTORS and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIVERS SEMICONDUCTORS AB and Merck KGaA, you can compare the effects of market volatilities on SIVERS SEMICONDUCTORS and Merck KGaA 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 SIVERS SEMICONDUCTORS with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIVERS SEMICONDUCTORS and Merck KGaA.
Diversification Opportunities for SIVERS SEMICONDUCTORS and Merck KGaA
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SIVERS and Merck is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SIVERS SEMICONDUCTORS AB and Merck KGaA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck KGaA and SIVERS SEMICONDUCTORS 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 SIVERS SEMICONDUCTORS AB are associated (or correlated) with Merck KGaA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck KGaA has no effect on the direction of SIVERS SEMICONDUCTORS i.e., SIVERS SEMICONDUCTORS and Merck KGaA go up and down completely randomly.
Pair Corralation between SIVERS SEMICONDUCTORS and Merck KGaA
Assuming the 90 days horizon SIVERS SEMICONDUCTORS AB is expected to under-perform the Merck KGaA. In addition to that, SIVERS SEMICONDUCTORS is 9.68 times more volatile than Merck KGaA. It trades about -0.09 of its total potential returns per unit of risk. Merck KGaA is currently generating about -0.28 per unit of volatility. If you would invest 15,360 in Merck KGaA on September 3, 2024 and sell it today you would lose (1,200) from holding Merck KGaA or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIVERS SEMICONDUCTORS AB vs. Merck KGaA
Performance |
| Timeline |
| SIVERS SEMICONDUCTORS |
| Merck KGaA |
SIVERS SEMICONDUCTORS and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIVERS SEMICONDUCTORS and Merck KGaA
The main advantage of trading using opposite SIVERS SEMICONDUCTORS and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIVERS SEMICONDUCTORS position performs unexpectedly, Merck KGaA 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 KGaA will offset losses from the drop in Merck KGaA's long position.| SIVERS SEMICONDUCTORS vs. COLUMBIA SPORTSWEAR | SIVERS SEMICONDUCTORS vs. UNIVERSAL MUSIC GROUP | SIVERS SEMICONDUCTORS vs. ANTA SPORTS PRODUCT | SIVERS SEMICONDUCTORS vs. DOCDATA |
| Merck KGaA vs. Gol Intelligent Airlines | Merck KGaA vs. BJs Wholesale Club | Merck KGaA vs. Fast Retailing Co | Merck KGaA vs. JAPAN AIRLINES |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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