Correlation Between Merck and AGRANA Beteiligungs
Can any of the company-specific risk be diversified away by investing in both Merck and AGRANA Beteiligungs 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 AGRANA Beteiligungs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and AGRANA Beteiligungs Aktiengesellschaft, you can compare the effects of market volatilities on Merck and AGRANA Beteiligungs 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 AGRANA Beteiligungs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and AGRANA Beteiligungs.
Diversification Opportunities for Merck and AGRANA Beteiligungs
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and AGRANA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and AGRANA Beteiligungs Aktiengese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGRANA Beteiligungs 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 AGRANA Beteiligungs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGRANA Beteiligungs has no effect on the direction of Merck i.e., Merck and AGRANA Beteiligungs go up and down completely randomly.
Pair Corralation between Merck and AGRANA Beteiligungs
Assuming the 90 days trading horizon Merck Company is expected to generate 0.91 times more return on investment than AGRANA Beteiligungs. However, Merck Company is 1.09 times less risky than AGRANA Beteiligungs. It trades about 0.0 of its potential returns per unit of risk. AGRANA Beteiligungs Aktiengesellschaft is currently generating about -0.02 per unit of risk. If you would invest 9,875 in Merck Company on August 30, 2024 and sell it today you would lose (95.00) from holding Merck Company or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. AGRANA Beteiligungs Aktiengese
Performance |
| Timeline |
| Merck Company |
| AGRANA Beteiligungs |
Merck and AGRANA Beteiligungs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and AGRANA Beteiligungs
The main advantage of trading using opposite Merck and AGRANA Beteiligungs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, AGRANA Beteiligungs 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 AGRANA Beteiligungs will offset losses from the drop in AGRANA Beteiligungs' long position.| Merck vs. RATH Aktiengesellschaft | Merck vs. AT S Austria | Merck vs. BAWAG Group AG | Merck vs. Semperit Aktiengesellschaft Holding |
| AGRANA Beteiligungs vs. Oesterr Post AG | AGRANA Beteiligungs vs. Andritz AG | AGRANA Beteiligungs vs. EVN AG | AGRANA Beteiligungs vs. Wienerberger AG |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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