Correlation Between Merck and Coinsilium Group
Can any of the company-specific risk be diversified away by investing in both Merck and Coinsilium Group 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 Coinsilium Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Coinsilium Group, you can compare the effects of market volatilities on Merck and Coinsilium Group 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 Coinsilium Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Coinsilium Group.
Diversification Opportunities for Merck and Coinsilium Group
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Coinsilium is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Coinsilium Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinsilium Group 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 Coinsilium Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinsilium Group has no effect on the direction of Merck i.e., Merck and Coinsilium Group go up and down completely randomly.
Pair Corralation between Merck and Coinsilium Group
Considering the 90-day investment horizon Merck is expected to generate 533.31 times less return on investment than Coinsilium Group. But when comparing it to its historical volatility, Merck Company is 17.92 times less risky than Coinsilium Group. It trades about 0.0 of its potential returns per unit of risk. Coinsilium Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.30 in Coinsilium Group on September 2, 2024 and sell it today you would earn a total of 3.95 from holding Coinsilium Group or generate 303.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Coinsilium Group
Performance |
| Timeline |
| Merck Company |
| Coinsilium Group |
Merck and Coinsilium Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Coinsilium Group
The main advantage of trading using opposite Merck and Coinsilium Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Coinsilium Group 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 Coinsilium Group will offset losses from the drop in Coinsilium Group's long position.The idea behind Merck Company and Coinsilium Group 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.| Coinsilium Group vs. Waldencast Acquisition Corp | Coinsilium Group vs. Alkami Technology | Coinsilium Group vs. ADEIA P | Coinsilium Group vs. Paycor HCM |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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