Correlation Between Merck and RATH Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Merck and RATH Aktiengesellscha 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 RATH Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and RATH Aktiengesellschaft, you can compare the effects of market volatilities on Merck and RATH Aktiengesellscha 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 RATH Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and RATH Aktiengesellscha.
Diversification Opportunities for Merck and RATH Aktiengesellscha
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merck and RATH is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and RATH Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATH Aktiengesellschaft 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 RATH Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATH Aktiengesellschaft has no effect on the direction of Merck i.e., Merck and RATH Aktiengesellscha go up and down completely randomly.
Pair Corralation between Merck and RATH Aktiengesellscha
Assuming the 90 days trading horizon Merck Company is expected to generate 0.63 times more return on investment than RATH Aktiengesellscha. However, Merck Company is 1.58 times less risky than RATH Aktiengesellscha. It trades about 0.02 of its potential returns per unit of risk. RATH Aktiengesellschaft is currently generating about 0.01 per unit of risk. If you would invest 9,213 in Merck Company on August 27, 2024 and sell it today you would earn a total of 527.00 from holding Merck Company or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Merck Company vs. RATH Aktiengesellschaft
Performance |
| Timeline |
| Merck Company |
| RATH Aktiengesellschaft |
Merck and RATH Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and RATH Aktiengesellscha
The main advantage of trading using opposite Merck and RATH Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, RATH Aktiengesellscha 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 RATH Aktiengesellscha will offset losses from the drop in RATH Aktiengesellscha's long position.| Merck vs. RATH Aktiengesellschaft | Merck vs. AT S Austria | Merck vs. BAWAG Group AG | Merck vs. Semperit Aktiengesellschaft Holding |
| RATH Aktiengesellscha vs. Oberbank AG | RATH Aktiengesellscha vs. Semperit Aktiengesellschaft Holding | RATH Aktiengesellscha vs. Telekom Austria AG | RATH Aktiengesellscha vs. Oesterr Post 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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