Correlation Between Merck and CSPC PHARMACEUTGR
Can any of the company-specific risk be diversified away by investing in both Merck and CSPC PHARMACEUTGR 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 Merck and CSPC PHARMACEUTGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Co and CSPC PHARMACEUTGR ADR4, you can compare the effects of market volatilities on Merck and CSPC PHARMACEUTGR 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 Merck with a short position of CSPC PHARMACEUTGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and CSPC PHARMACEUTGR.
Diversification Opportunities for Merck and CSPC PHARMACEUTGR
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and CSPC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Merck Co and CSPC PHARMACEUTGR ADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC PHARMACEUTGR ADR4 and Merck 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 Merck Co are associated (or correlated) with CSPC PHARMACEUTGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC PHARMACEUTGR ADR4 has no effect on the direction of Merck i.e., Merck and CSPC PHARMACEUTGR go up and down completely randomly.
Pair Corralation between Merck and CSPC PHARMACEUTGR
Assuming the 90 days horizon Merck Co is expected to under-perform the CSPC PHARMACEUTGR. But the stock apears to be less risky and, when comparing its historical volatility, Merck Co is 2.75 times less risky than CSPC PHARMACEUTGR. The stock trades about -0.06 of its potential returns per unit of risk. The CSPC PHARMACEUTGR ADR4 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 266.00 in CSPC PHARMACEUTGR ADR4 on August 25, 2024 and sell it today you would lose (34.00) from holding CSPC PHARMACEUTGR ADR4 or give up 12.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Co vs. CSPC PHARMACEUTGR ADR4
Performance |
| Timeline |
| Merck |
| CSPC PHARMACEUTGR ADR4 |
Merck and CSPC PHARMACEUTGR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and CSPC PHARMACEUTGR
The main advantage of trading using opposite Merck and CSPC PHARMACEUTGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, CSPC PHARMACEUTGR 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 CSPC PHARMACEUTGR will offset losses from the drop in CSPC PHARMACEUTGR's long position.The idea behind Merck Co and CSPC PHARMACEUTGR ADR4 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.| CSPC PHARMACEUTGR vs. Johnson Johnson | CSPC PHARMACEUTGR vs. Merck Co | CSPC PHARMACEUTGR vs. Roche Holding Ltd | CSPC PHARMACEUTGR vs. Amgen Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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