Correlation Between Merck and CGG
Can any of the company-specific risk be diversified away by investing in both Merck and CGG 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 CGG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and CGG, you can compare the effects of market volatilities on Merck and CGG 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 CGG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and CGG.
Diversification Opportunities for Merck and CGG
Pay attention - limited upside
The 3 months correlation between Merck and CGG is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and CGG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGG 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 CGG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGG has no effect on the direction of Merck i.e., Merck and CGG go up and down completely randomly.
Pair Corralation between Merck and CGG
If you would invest 10,073 in Merck Company on September 12, 2024 and sell it today you would earn a total of 27.00 from holding Merck Company or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merck Company vs. CGG
Performance |
| Timeline |
| Merck Company |
| CGG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and CGG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and CGG
The main advantage of trading using opposite Merck and CGG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, CGG 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 CGG will offset losses from the drop in CGG's long position.| Merck vs. Victory Integrity Smallmid Cap | Merck vs. Hilton Worldwide Holdings | Merck vs. NVIDIA | Merck vs. JPMorgan Chase Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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