Correlation Between Guardforce and Merck
Can any of the company-specific risk be diversified away by investing in both Guardforce 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 Guardforce and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guardforce AI Co and Merck Company, you can compare the effects of market volatilities on Guardforce 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 Guardforce with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardforce and Merck.
Diversification Opportunities for Guardforce and Merck
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Guardforce and Merck is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Guardforce AI Co and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Guardforce 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 Guardforce AI Co 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 Guardforce i.e., Guardforce and Merck go up and down completely randomly.
Pair Corralation between Guardforce and Merck
Given the investment horizon of 90 days Guardforce AI Co is expected to generate 3.92 times more return on investment than Merck. However, Guardforce is 3.92 times more volatile than Merck Company. It trades about 0.09 of its potential returns per unit of risk. Merck Company is currently generating about -0.01 per unit of risk. If you would invest 113.00 in Guardforce AI Co on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Guardforce AI Co or generate 7.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guardforce AI Co vs. Merck Company
Performance |
| Timeline |
| Guardforce AI |
| Merck Company |
Guardforce and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guardforce and Merck
The main advantage of trading using opposite Guardforce and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardforce 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.| Guardforce vs. Bridger Aerospace Group | Guardforce vs. Supercom | Guardforce vs. Guardforce AI Co | Guardforce vs. LogicMark |
| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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