Correlation Between Merck and Amtech Systems
Can any of the company-specific risk be diversified away by investing in both Merck and Amtech Systems 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 Amtech Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Amtech Systems, you can compare the effects of market volatilities on Merck and Amtech Systems 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 Amtech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Amtech Systems.
Diversification Opportunities for Merck and Amtech Systems
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Amtech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Amtech Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtech Systems 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 Amtech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtech Systems has no effect on the direction of Merck i.e., Merck and Amtech Systems go up and down completely randomly.
Pair Corralation between Merck and Amtech Systems
Considering the 90-day investment horizon Merck Company is expected to generate 0.31 times more return on investment than Amtech Systems. However, Merck Company is 3.25 times less risky than Amtech Systems. It trades about 0.02 of its potential returns per unit of risk. Amtech Systems is currently generating about -0.01 per unit of risk. If you would invest 9,759 in Merck Company on August 24, 2024 and sell it today you would earn a total of 365.00 from holding Merck Company or generate 3.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Merck Company vs. Amtech Systems
Performance |
| Timeline |
| Merck Company |
| Amtech Systems |
Merck and Amtech Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Amtech Systems
The main advantage of trading using opposite Merck and Amtech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Amtech Systems 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 Amtech Systems will offset losses from the drop in Amtech Systems' long position.The idea behind Merck Company and Amtech Systems 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.| Amtech Systems vs. Ultra Clean Holdings | Amtech Systems vs. Cohu Inc | Amtech Systems vs. Ichor Holdings | Amtech Systems vs. Entegris |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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