Correlation Between Addiko Bank and Merck
Can any of the company-specific risk be diversified away by investing in both Addiko Bank 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 Addiko Bank and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addiko Bank AG and Merck Company, you can compare the effects of market volatilities on Addiko Bank 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 Addiko Bank with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addiko Bank and Merck.
Diversification Opportunities for Addiko Bank and Merck
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Addiko and Merck is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Addiko Bank AG and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Addiko Bank 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 Addiko Bank AG 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 Addiko Bank i.e., Addiko Bank and Merck go up and down completely randomly.
Pair Corralation between Addiko Bank and Merck
Assuming the 90 days trading horizon Addiko Bank AG is expected to generate 0.76 times more return on investment than Merck. However, Addiko Bank AG is 1.32 times less risky than Merck. It trades about -0.01 of its potential returns per unit of risk. Merck Company is currently generating about -0.13 per unit of risk. If you would invest 1,880 in Addiko Bank AG on November 29, 2024 and sell it today you would lose (20.00) from holding Addiko Bank AG or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addiko Bank AG vs. Merck Company
Performance |
| Timeline |
| Addiko Bank AG |
| Merck Company |
Addiko Bank and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addiko Bank and Merck
The main advantage of trading using opposite Addiko Bank and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addiko Bank 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.| Addiko Bank vs. Raiffeisen Bank International | Addiko Bank vs. AMAG Austria Metall | Addiko Bank vs. UNIQA Insurance Group | Addiko Bank vs. CNH Industrial NV |
| Merck vs. Addiko Bank AG | Merck vs. CNH Industrial NV | Merck vs. Wiener Privatbank SE | Merck vs. Raiffeisen Bank International |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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