Correlation Between Cannabis Suisse and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both Cannabis Suisse 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 Cannabis Suisse and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannabis Suisse Corp and Merck KGaA ADR, you can compare the effects of market volatilities on Cannabis Suisse 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 Cannabis Suisse with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannabis Suisse and Merck KGaA.
Diversification Opportunities for Cannabis Suisse and Merck KGaA
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cannabis and Merck is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cannabis Suisse Corp and Merck KGaA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck KGaA ADR and Cannabis Suisse 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 Cannabis Suisse Corp 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 ADR has no effect on the direction of Cannabis Suisse i.e., Cannabis Suisse and Merck KGaA go up and down completely randomly.
Pair Corralation between Cannabis Suisse and Merck KGaA
Given the investment horizon of 90 days Cannabis Suisse Corp is expected to generate 72.4 times more return on investment than Merck KGaA. However, Cannabis Suisse is 72.4 times more volatile than Merck KGaA ADR. It trades about 0.19 of its potential returns per unit of risk. Merck KGaA ADR is currently generating about -0.39 per unit of risk. If you would invest 1.00 in Cannabis Suisse Corp on August 25, 2024 and sell it today you would lose (0.15) from holding Cannabis Suisse Corp or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cannabis Suisse Corp vs. Merck KGaA ADR
Performance |
| Timeline |
| Cannabis Suisse Corp |
| Merck KGaA ADR |
Cannabis Suisse and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cannabis Suisse and Merck KGaA
The main advantage of trading using opposite Cannabis Suisse and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannabis Suisse 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.| Cannabis Suisse vs. Green Cures Botanical | Cannabis Suisse vs. Galexxy Holdings | Cannabis Suisse vs. Indoor Harvest Corp | Cannabis Suisse vs. Speakeasy Cannabis Club |
| Merck KGaA vs. Green Cures Botanical | Merck KGaA vs. Galexxy Holdings | Merck KGaA vs. Indoor Harvest Corp | Merck KGaA vs. Speakeasy Cannabis Club |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |