Correlation Between Anything Tech and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both Anything Tech 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 Anything Tech and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anything Tech Media and Merck KGaA ADR, you can compare the effects of market volatilities on Anything Tech 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 Anything Tech with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anything Tech and Merck KGaA.
Diversification Opportunities for Anything Tech and Merck KGaA
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anything and Merck is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Anything Tech Media 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 Anything Tech 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 Anything Tech Media 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 Anything Tech i.e., Anything Tech and Merck KGaA go up and down completely randomly.
Pair Corralation between Anything Tech and Merck KGaA
Given the investment horizon of 90 days Anything Tech Media is expected to generate 7.32 times more return on investment than Merck KGaA. However, Anything Tech is 7.32 times more volatile than Merck KGaA ADR. It trades about 0.04 of its potential returns per unit of risk. Merck KGaA ADR is currently generating about -0.02 per unit of risk. If you would invest 0.10 in Anything Tech Media on August 29, 2024 and sell it today you would lose (0.06) from holding Anything Tech Media or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anything Tech Media vs. Merck KGaA ADR
Performance |
| Timeline |
| Anything Tech Media |
| Merck KGaA ADR |
Anything Tech and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anything Tech and Merck KGaA
The main advantage of trading using opposite Anything Tech and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anything Tech 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.| Anything Tech vs. Nutralife Biosciences | Anything Tech vs. Merck KGaA ADR | Anything Tech vs. Mc Endvrs | Anything Tech vs. Goodbody Health |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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