Correlation Between Merck and Chicken Soup
Can any of the company-specific risk be diversified away by investing in both Merck and Chicken Soup 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 Chicken Soup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Chicken Soup For, you can compare the effects of market volatilities on Merck and Chicken Soup 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 Chicken Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Chicken Soup.
Diversification Opportunities for Merck and Chicken Soup
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Chicken is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Chicken Soup For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicken Soup For 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 Chicken Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicken Soup For has no effect on the direction of Merck i.e., Merck and Chicken Soup go up and down completely randomly.
Pair Corralation between Merck and Chicken Soup
If you would invest 0.79 in Chicken Soup For on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Chicken Soup For or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Merck Company vs. Chicken Soup For
Performance |
| Timeline |
| Merck Company |
| Chicken Soup For |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Chicken Soup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Chicken Soup
The main advantage of trading using opposite Merck and Chicken Soup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Chicken Soup 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 Chicken Soup will offset losses from the drop in Chicken Soup's long position.The idea behind Merck Company and Chicken Soup For 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.| Chicken Soup vs. Pagaya Technologies Ltd | Chicken Soup vs. Intelligent Living Application | Chicken Soup vs. Starbox Group Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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