Correlation Between Merck and Gamehost
Can any of the company-specific risk be diversified away by investing in both Merck and Gamehost 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 Gamehost into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Gamehost, you can compare the effects of market volatilities on Merck and Gamehost 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 Gamehost. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Gamehost.
Diversification Opportunities for Merck and Gamehost
Very good diversification
The 3 months correlation between Merck and Gamehost is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Gamehost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamehost 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 Gamehost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamehost has no effect on the direction of Merck i.e., Merck and Gamehost go up and down completely randomly.
Pair Corralation between Merck and Gamehost
Considering the 90-day investment horizon Merck Company is expected to under-perform the Gamehost. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.18 times less risky than Gamehost. The stock trades about 0.0 of its potential returns per unit of risk. The Gamehost is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 634.00 in Gamehost on September 3, 2024 and sell it today you would earn a total of 144.00 from holding Gamehost or generate 22.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.16% |
| Values | Daily Returns |
Merck Company vs. Gamehost
Performance |
| Timeline |
| Merck Company |
| Gamehost |
Merck and Gamehost Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Gamehost
The main advantage of trading using opposite Merck and Gamehost positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Gamehost 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 Gamehost will offset losses from the drop in Gamehost's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Gamehost vs. Arhaus Inc | Gamehost vs. Floor Decor Holdings | Gamehost vs. Live Ventures | Gamehost vs. Cisco Systems |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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