Correlation Between GelStat Corp and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both GelStat Corp 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 GelStat Corp and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GelStat Corp and Merck KGaA ADR, you can compare the effects of market volatilities on GelStat Corp 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 GelStat Corp with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GelStat Corp and Merck KGaA.
Diversification Opportunities for GelStat Corp and Merck KGaA
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between GelStat and Merck is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding GelStat 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 GelStat Corp 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 GelStat 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 GelStat Corp i.e., GelStat Corp and Merck KGaA go up and down completely randomly.
Pair Corralation between GelStat Corp and Merck KGaA
Given the investment horizon of 90 days GelStat Corp is expected to generate 9.84 times more return on investment than Merck KGaA. However, GelStat Corp is 9.84 times more volatile than Merck KGaA ADR. It trades about 0.16 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 0.03 in GelStat Corp on August 25, 2024 and sell it today you would earn a total of 0.01 from holding GelStat Corp or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GelStat Corp vs. Merck KGaA ADR
Performance |
| Timeline |
| GelStat Corp |
| Merck KGaA ADR |
GelStat Corp and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GelStat Corp and Merck KGaA
The main advantage of trading using opposite GelStat Corp and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GelStat Corp 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.| GelStat Corp vs. Rimrock Gold Corp | GelStat Corp vs. Emergent Health Corp | GelStat Corp vs. Galexxy Holdings | GelStat Corp vs. Cann American Corp |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |