Correlation Between Merck and Conquest Resources
Can any of the company-specific risk be diversified away by investing in both Merck and Conquest Resources 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 Conquest Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Conquest Resources Limited, you can compare the effects of market volatilities on Merck and Conquest Resources 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 Conquest Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Conquest Resources.
Diversification Opportunities for Merck and Conquest Resources
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Conquest is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Conquest Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conquest Resources 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 Conquest Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conquest Resources has no effect on the direction of Merck i.e., Merck and Conquest Resources go up and down completely randomly.
Pair Corralation between Merck and Conquest Resources
Considering the 90-day investment horizon Merck Company is expected to under-perform the Conquest Resources. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 6.62 times less risky than Conquest Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Conquest Resources Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.39 in Conquest Resources Limited on August 26, 2024 and sell it today you would earn a total of 0.36 from holding Conquest Resources Limited or generate 25.9% 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. Conquest Resources Limited
Performance |
| Timeline |
| Merck Company |
| Conquest Resources |
Merck and Conquest Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Conquest Resources
The main advantage of trading using opposite Merck and Conquest Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Conquest Resources 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 Conquest Resources will offset losses from the drop in Conquest Resources' long position.| Merck vs. Capricor Therapeutics | Merck vs. Akari Therapeutics PLC | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings |
| Conquest Resources vs. Ascendant Resources | Conquest Resources vs. Cantex Mine Development | Conquest Resources vs. Amarc Resources | Conquest Resources vs. Sterling Metals Corp |
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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