Correlation Between Merck and Inversora Juramento
Can any of the company-specific risk be diversified away by investing in both Merck and Inversora Juramento 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 and Inversora Juramento into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Inversora Juramento SA, you can compare the effects of market volatilities on Merck and Inversora Juramento 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 with a short position of Inversora Juramento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Inversora Juramento.
Diversification Opportunities for Merck and Inversora Juramento
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Inversora is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Inversora Juramento SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inversora Juramento and Merck 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 Company are associated (or correlated) with Inversora Juramento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inversora Juramento has no effect on the direction of Merck i.e., Merck and Inversora Juramento go up and down completely randomly.
Pair Corralation between Merck and Inversora Juramento
Assuming the 90 days trading horizon Merck Company is expected to generate 0.47 times more return on investment than Inversora Juramento. However, Merck Company is 2.14 times less risky than Inversora Juramento. It trades about 0.08 of its potential returns per unit of risk. Inversora Juramento SA is currently generating about -0.12 per unit of risk. If you would invest 2,290,000 in Merck Company on October 20, 2024 and sell it today you would earn a total of 42,500 from holding Merck Company or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Merck Company vs. Inversora Juramento SA
Performance |
| Timeline |
| Merck Company |
| Inversora Juramento |
Merck and Inversora Juramento Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Inversora Juramento
The main advantage of trading using opposite Merck and Inversora Juramento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Inversora Juramento 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 Inversora Juramento will offset losses from the drop in Inversora Juramento's long position.The idea behind Merck Company and Inversora Juramento SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Inversora Juramento vs. Molinos Agro SA | Inversora Juramento vs. Cresud SA | Inversora Juramento vs. San Miguel AG | Inversora Juramento vs. Ledesma SAAI |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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