Correlation Between Multilaser Industrial and Merck
Can any of the company-specific risk be diversified away by investing in both Multilaser Industrial 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 Multilaser Industrial and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multilaser Industrial SA and Merck Co, you can compare the effects of market volatilities on Multilaser Industrial 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 Multilaser Industrial with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multilaser Industrial and Merck.
Diversification Opportunities for Multilaser Industrial and Merck
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multilaser and Merck is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Multilaser Industrial SA and Merck Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck and Multilaser Industrial 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 Multilaser Industrial SA 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 has no effect on the direction of Multilaser Industrial i.e., Multilaser Industrial and Merck go up and down completely randomly.
Pair Corralation between Multilaser Industrial and Merck
Assuming the 90 days trading horizon Multilaser Industrial SA is expected to under-perform the Merck. In addition to that, Multilaser Industrial is 2.0 times more volatile than Merck Co. It trades about -0.44 of its total potential returns per unit of risk. Merck Co is currently generating about 0.09 per unit of volatility. If you would invest 7,385 in Merck Co on September 4, 2024 and sell it today you would earn a total of 230.00 from holding Merck Co or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multilaser Industrial SA vs. Merck Co
Performance |
| Timeline |
| Multilaser Industrial |
| Merck |
Multilaser Industrial and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multilaser Industrial and Merck
The main advantage of trading using opposite Multilaser Industrial and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multilaser Industrial 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.| Multilaser Industrial vs. Intelbras SA | Multilaser Industrial vs. Pet Center Comrcio | Multilaser Industrial vs. Locaweb Servios de | Multilaser Industrial vs. Mliuz SA |
| Merck vs. Multilaser Industrial SA | Merck vs. Metalrgica Riosulense SA | Merck vs. Verizon Communications | Merck vs. Charter Communications |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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