Correlation Between Merck and FDCTech
Can any of the company-specific risk be diversified away by investing in both Merck and FDCTech 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 FDCTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and FDCTech, you can compare the effects of market volatilities on Merck and FDCTech 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 FDCTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and FDCTech.
Diversification Opportunities for Merck and FDCTech
Pay attention - limited upside
The 3 months correlation between Merck and FDCTech is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and FDCTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDCTech 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 FDCTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDCTech has no effect on the direction of Merck i.e., Merck and FDCTech go up and down completely randomly.
Pair Corralation between Merck and FDCTech
Considering the 90-day investment horizon Merck is expected to generate 4774.7 times less return on investment than FDCTech. But when comparing it to its historical volatility, Merck Company is 50.44 times less risky than FDCTech. It trades about 0.0 of its potential returns per unit of risk. FDCTech is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.20 in FDCTech on September 3, 2024 and sell it today you would lose (0.70) from holding FDCTech or give up 58.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Merck Company vs. FDCTech
Performance |
| Timeline |
| Merck Company |
| FDCTech |
Merck and FDCTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and FDCTech
The main advantage of trading using opposite Merck and FDCTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, FDCTech 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 FDCTech will offset losses from the drop in FDCTech's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| FDCTech vs. First Tractor | FDCTech vs. Ag Growth International | FDCTech vs. AmeraMex International | FDCTech vs. Arts Way Manufacturing 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |