Correlation Between Merck and Golden Grail
Can any of the company-specific risk be diversified away by investing in both Merck and Golden Grail 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 Golden Grail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Golden Grail Technology, you can compare the effects of market volatilities on Merck and Golden Grail 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 Golden Grail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Golden Grail.
Diversification Opportunities for Merck and Golden Grail
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Golden is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Golden Grail Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Grail Technology 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 Golden Grail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Grail Technology has no effect on the direction of Merck i.e., Merck and Golden Grail go up and down completely randomly.
Pair Corralation between Merck and Golden Grail
Considering the 90-day investment horizon Merck is expected to generate 240.8 times less return on investment than Golden Grail. But when comparing it to its historical volatility, Merck Company is 9.68 times less risky than Golden Grail. It trades about 0.0 of its potential returns per unit of risk. Golden Grail Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Golden Grail Technology on September 3, 2024 and sell it today you would lose (38.00) from holding Golden Grail Technology or give up 90.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Golden Grail Technology
Performance |
| Timeline |
| Merck Company |
| Golden Grail Technology |
Merck and Golden Grail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Golden Grail
The main advantage of trading using opposite Merck and Golden Grail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Golden Grail 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 Golden Grail will offset losses from the drop in Golden Grail's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Golden Grail vs. Tencent Holdings | Golden Grail vs. Autohome | Golden Grail vs. Arena Group Holdings | Golden Grail vs. Asset Entities Class |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |