Correlation Between Merck and Ambu A/S
Can any of the company-specific risk be diversified away by investing in both Merck and Ambu A/S 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 Ambu A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Ambu AS, you can compare the effects of market volatilities on Merck and Ambu A/S 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 Ambu A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Ambu A/S.
Diversification Opportunities for Merck and Ambu A/S
Very good diversification
The 3 months correlation between Merck and Ambu is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Ambu AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambu A/S 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 Ambu A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambu A/S has no effect on the direction of Merck i.e., Merck and Ambu A/S go up and down completely randomly.
Pair Corralation between Merck and Ambu A/S
Considering the 90-day investment horizon Merck Company is expected to under-perform the Ambu A/S. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.26 times less risky than Ambu A/S. The stock trades about 0.0 of its potential returns per unit of risk. The Ambu AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,213 in Ambu AS on August 26, 2024 and sell it today you would earn a total of 777.00 from holding Ambu AS or generate 64.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Ambu AS
Performance |
| Timeline |
| Merck Company |
| Ambu A/S |
Merck and Ambu A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Ambu A/S
The main advantage of trading using opposite Merck and Ambu A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Ambu A/S 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 Ambu A/S will offset losses from the drop in Ambu A/S's long position.| Merck vs. Capricor Therapeutics | Merck vs. Akari Therapeutics PLC | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings |
| Ambu A/S vs. Rezolute | Ambu A/S vs. Tempest Therapeutics | Ambu A/S vs. Forte Biosciences | Ambu A/S vs. Dyadic International |
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 Stocks Directory module to find actively traded stocks across global markets.
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