Correlation Between Green Cures and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both Green Cures 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 Green Cures and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cures Botanical and Merck KGaA ADR, you can compare the effects of market volatilities on Green Cures 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 Green Cures with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cures and Merck KGaA.
Diversification Opportunities for Green Cures and Merck KGaA
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Green and Merck is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Green Cures Botanical 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 Green Cures 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 Green Cures Botanical 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 Green Cures i.e., Green Cures and Merck KGaA go up and down completely randomly.
Pair Corralation between Green Cures and Merck KGaA
Given the investment horizon of 90 days Green Cures Botanical is expected to generate 35.83 times more return on investment than Merck KGaA. However, Green Cures is 35.83 times more volatile than Merck KGaA ADR. It trades about 0.17 of its potential returns per unit of risk. Merck KGaA ADR is currently generating about -0.36 per unit of risk. If you would invest 0.02 in Green Cures Botanical on August 29, 2024 and sell it today you would lose (0.01) from holding Green Cures Botanical or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cures Botanical vs. Merck KGaA ADR
Performance |
| Timeline |
| Green Cures Botanical |
| Merck KGaA ADR |
Green Cures and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cures and Merck KGaA
The main advantage of trading using opposite Green Cures and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cures 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.The idea behind Green Cures Botanical and Merck KGaA ADR 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.| Merck KGaA vs. Recruit Holdings Co | Merck KGaA vs. Fresenius SE Co | Merck KGaA vs. Straumann Holding AG | Merck KGaA vs. MERCK Kommanditgesellschaft auf |
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.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |