Correlation Between Merck and Altair International
Can any of the company-specific risk be diversified away by investing in both Merck and Altair International 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 Altair International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Altair International Corp, you can compare the effects of market volatilities on Merck and Altair International 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 Altair International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Altair International.
Diversification Opportunities for Merck and Altair International
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merck and Altair is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Altair International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair International Corp 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 Altair International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair International Corp has no effect on the direction of Merck i.e., Merck and Altair International go up and down completely randomly.
Pair Corralation between Merck and Altair International
Considering the 90-day investment horizon Merck Company is expected to generate 0.11 times more return on investment than Altair International. However, Merck Company is 9.18 times less risky than Altair International. It trades about 0.0 of its potential returns per unit of risk. Altair International Corp is currently generating about -0.04 per unit of risk. If you would invest 10,187 in Merck Company on September 3, 2024 and sell it today you would lose (23.00) from holding Merck Company or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Altair International Corp
Performance |
| Timeline |
| Merck Company |
| Altair International Corp |
Merck and Altair International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Altair International
The main advantage of trading using opposite Merck and Altair International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Altair International 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 Altair International will offset losses from the drop in Altair International's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Altair International vs. Qubec Nickel Corp | Altair International vs. IGO Limited | Altair International vs. Avarone Metals | Altair International vs. Adriatic Metals PLC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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