Correlation Between KENEDIX OFFICE and Merck
Can any of the company-specific risk be diversified away by investing in both KENEDIX OFFICE 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 KENEDIX OFFICE and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENEDIX OFFICE INV and Merck Company, you can compare the effects of market volatilities on KENEDIX OFFICE 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 KENEDIX OFFICE with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENEDIX OFFICE and Merck.
Diversification Opportunities for KENEDIX OFFICE and Merck
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KENEDIX and Merck is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding KENEDIX OFFICE INV and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and KENEDIX OFFICE 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 KENEDIX OFFICE INV 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 KENEDIX OFFICE i.e., KENEDIX OFFICE and Merck go up and down completely randomly.
Pair Corralation between KENEDIX OFFICE and Merck
Assuming the 90 days horizon KENEDIX OFFICE INV is expected to generate 1.42 times more return on investment than Merck. However, KENEDIX OFFICE is 1.42 times more volatile than Merck Company. It trades about 0.05 of its potential returns per unit of risk. Merck Company is currently generating about -0.3 per unit of risk. If you would invest 87,500 in KENEDIX OFFICE INV on September 12, 2024 and sell it today you would earn a total of 1,500 from holding KENEDIX OFFICE INV or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KENEDIX OFFICE INV vs. Merck Company
Performance |
| Timeline |
| KENEDIX OFFICE INV |
| Merck Company |
KENEDIX OFFICE and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENEDIX OFFICE and Merck
The main advantage of trading using opposite KENEDIX OFFICE and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENEDIX OFFICE 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.| KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc | KENEDIX OFFICE vs. Apple Inc |
| Merck vs. PUBLIC STORAGE PRFO | Merck vs. Associated British Foods | Merck vs. SENECA FOODS A | Merck vs. Food Life Companies |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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