Correlation Between Merck KGaA and Golden Developing
Can any of the company-specific risk be diversified away by investing in both Merck KGaA and Golden Developing 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 KGaA and Golden Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck KGaA ADR and Golden Developing Solutions, you can compare the effects of market volatilities on Merck KGaA and Golden Developing 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 KGaA with a short position of Golden Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck KGaA and Golden Developing.
Diversification Opportunities for Merck KGaA and Golden Developing
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merck and Golden is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merck KGaA ADR and Golden Developing Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Developing and Merck KGaA 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 KGaA ADR are associated (or correlated) with Golden Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Developing has no effect on the direction of Merck KGaA i.e., Merck KGaA and Golden Developing go up and down completely randomly.
Pair Corralation between Merck KGaA and Golden Developing
If you would invest 0.01 in Golden Developing Solutions on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Golden Developing Solutions or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Merck KGaA ADR vs. Golden Developing Solutions
Performance |
| Timeline |
| Merck KGaA ADR |
| Golden Developing |
Merck KGaA and Golden Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck KGaA and Golden Developing
The main advantage of trading using opposite Merck KGaA and Golden Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck KGaA position performs unexpectedly, Golden Developing 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 Golden Developing will offset losses from the drop in Golden Developing's long position.| Merck KGaA vs. Green Cures Botanical | Merck KGaA vs. Galexxy Holdings | Merck KGaA vs. Indoor Harvest Corp | Merck KGaA vs. Speakeasy Cannabis Club |
| Golden Developing vs. Cann American Corp | Golden Developing vs. GelStat Corp | Golden Developing vs. Green Cures Botanical | Golden Developing vs. Rimrock Gold Corp |
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..
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