Correlation Between MERCK Kommanditgesells and US Lithium
Can any of the company-specific risk be diversified away by investing in both MERCK Kommanditgesells and US Lithium 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 Kommanditgesells and US Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MERCK Kommanditgesellschaft auf and US Lithium Corp, you can compare the effects of market volatilities on MERCK Kommanditgesells and US Lithium 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 Kommanditgesells with a short position of US Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of MERCK Kommanditgesells and US Lithium.
Diversification Opportunities for MERCK Kommanditgesells and US Lithium
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MERCK and LITH is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and US Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Lithium Corp and MERCK Kommanditgesells 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 Kommanditgesellschaft auf are associated (or correlated) with US Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Lithium Corp has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and US Lithium go up and down completely randomly.
Pair Corralation between MERCK Kommanditgesells and US Lithium
If you would invest 14,543 in MERCK Kommanditgesellschaft auf on November 9, 2024 and sell it today you would earn a total of 22.00 from holding MERCK Kommanditgesellschaft auf or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
MERCK Kommanditgesellschaft au vs. US Lithium Corp
Performance |
| Timeline |
| MERCK Kommanditgesells |
| US Lithium Corp |
MERCK Kommanditgesells and US Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MERCK Kommanditgesells and US Lithium
The main advantage of trading using opposite MERCK Kommanditgesells and US Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MERCK Kommanditgesells position performs unexpectedly, US Lithium 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 US Lithium will offset losses from the drop in US Lithium's long position.| MERCK Kommanditgesells vs. Greater Cannabis | MERCK Kommanditgesells vs. Merck KGaA ADR | MERCK Kommanditgesells vs. For The Earth | MERCK Kommanditgesells vs. Indo Global Exchange |
| US Lithium vs. Mc Endvrs | US Lithium vs. Kali Inc | US Lithium vs. One World Pharma | US Lithium vs. HempAmericana |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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