Correlation Between Merck Tbk and Darya Varia
Can any of the company-specific risk be diversified away by investing in both Merck Tbk and Darya Varia 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 Merck Tbk and Darya Varia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Tbk and Darya Varia Laboratoria Tbk, you can compare the effects of market volatilities on Merck Tbk and Darya Varia 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 Merck Tbk with a short position of Darya Varia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck Tbk and Darya Varia.
Diversification Opportunities for Merck Tbk and Darya Varia
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Merck and Darya is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Merck Tbk and Darya Varia Laboratoria Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darya Varia Laboratoria and Merck Tbk 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 Merck Tbk are associated (or correlated) with Darya Varia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darya Varia Laboratoria has no effect on the direction of Merck Tbk i.e., Merck Tbk and Darya Varia go up and down completely randomly.
Pair Corralation between Merck Tbk and Darya Varia
Assuming the 90 days trading horizon Merck Tbk is expected to generate 0.6 times more return on investment than Darya Varia. However, Merck Tbk is 1.66 times less risky than Darya Varia. It trades about -0.05 of its potential returns per unit of risk. Darya Varia Laboratoria Tbk is currently generating about -0.04 per unit of risk. If you would invest 413,460 in Merck Tbk on August 28, 2024 and sell it today you would lose (68,460) from holding Merck Tbk or give up 16.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Tbk vs. Darya Varia Laboratoria Tbk
Performance |
| Timeline |
| Merck Tbk |
| Darya Varia Laboratoria |
Merck Tbk and Darya Varia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck Tbk and Darya Varia
The main advantage of trading using opposite Merck Tbk and Darya Varia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck Tbk position performs unexpectedly, Darya Varia 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 Darya Varia will offset losses from the drop in Darya Varia's long position.| Merck Tbk vs. Astra Graphia Tbk | Merck Tbk vs. Hexindo Adiperkasa Tbk | Merck Tbk vs. Lautan Luas Tbk | Merck Tbk vs. Citra Marga Nusaphala |
| Darya Varia vs. Astra Graphia Tbk | Darya Varia vs. Hexindo Adiperkasa Tbk | Darya Varia vs. Lautan Luas Tbk | Darya Varia vs. Citra Marga Nusaphala |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |