Correlation Between Galexxy Holdings and Merck KGaA
Can any of the company-specific risk be diversified away by investing in both Galexxy Holdings 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 Galexxy Holdings and Merck KGaA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galexxy Holdings and Merck KGaA ADR, you can compare the effects of market volatilities on Galexxy Holdings 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 Galexxy Holdings with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galexxy Holdings and Merck KGaA.
Diversification Opportunities for Galexxy Holdings and Merck KGaA
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Galexxy and Merck is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Galexxy Holdings 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 Galexxy Holdings 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 Galexxy Holdings 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 Galexxy Holdings i.e., Galexxy Holdings and Merck KGaA go up and down completely randomly.
Pair Corralation between Galexxy Holdings and Merck KGaA
Given the investment horizon of 90 days Galexxy Holdings is expected to under-perform the Merck KGaA. In addition to that, Galexxy Holdings is 7.32 times more volatile than Merck KGaA ADR. It trades about -0.13 of its total potential returns per unit of risk. Merck KGaA ADR is currently generating about -0.39 per unit of volatility. If you would invest 3,364 in Merck KGaA ADR on August 25, 2024 and sell it today you would lose (411.00) from holding Merck KGaA ADR or give up 12.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galexxy Holdings vs. Merck KGaA ADR
Performance |
| Timeline |
| Galexxy Holdings |
| Merck KGaA ADR |
Galexxy Holdings and Merck KGaA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galexxy Holdings and Merck KGaA
The main advantage of trading using opposite Galexxy Holdings and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galexxy Holdings 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.| Galexxy Holdings vs. Green Cures Botanical | Galexxy Holdings vs. Indoor Harvest Corp | Galexxy Holdings vs. Speakeasy Cannabis Club | Galexxy Holdings vs. City View Green |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |