Correlation Between ASPEN PHARUNADR and Merck
Can any of the company-specific risk be diversified away by investing in both ASPEN PHARUNADR 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 ASPEN PHARUNADR and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN PHARUNADR 1 and Merck Company, you can compare the effects of market volatilities on ASPEN PHARUNADR 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 ASPEN PHARUNADR with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN PHARUNADR and Merck.
Diversification Opportunities for ASPEN PHARUNADR and Merck
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ASPEN and Merck is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN PHARUNADR 1 and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and ASPEN PHARUNADR 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 ASPEN PHARUNADR 1 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 ASPEN PHARUNADR i.e., ASPEN PHARUNADR and Merck go up and down completely randomly.
Pair Corralation between ASPEN PHARUNADR and Merck
Assuming the 90 days trading horizon ASPEN PHARUNADR 1 is expected to generate 1.21 times more return on investment than Merck. However, ASPEN PHARUNADR is 1.21 times more volatile than Merck Company. It trades about 0.15 of its potential returns per unit of risk. Merck Company is currently generating about -0.3 per unit of risk. If you would invest 855.00 in ASPEN PHARUNADR 1 on November 29, 2024 and sell it today you would earn a total of 50.00 from holding ASPEN PHARUNADR 1 or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASPEN PHARUNADR 1 vs. Merck Company
Performance |
| Timeline |
| ASPEN PHARUNADR 1 |
| Merck Company |
ASPEN PHARUNADR and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN PHARUNADR and Merck
The main advantage of trading using opposite ASPEN PHARUNADR and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN PHARUNADR 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.| ASPEN PHARUNADR vs. China Railway Construction | ASPEN PHARUNADR vs. Hitachi Construction Machinery | ASPEN PHARUNADR vs. Hyatt Hotels | ASPEN PHARUNADR vs. MHP Hotel AG |
| Merck vs. EBRO FOODS | Merck vs. PLANT VEDA FOODS | Merck vs. INDO RAMA SYNTHETIC | Merck vs. Cal Maine Foods |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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