Correlation Between Merck and Tinka Resources
Can any of the company-specific risk be diversified away by investing in both Merck and Tinka 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 Tinka 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 Tinka Resources Limited, you can compare the effects of market volatilities on Merck and Tinka 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 Tinka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Tinka Resources.
Diversification Opportunities for Merck and Tinka Resources
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Tinka is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Tinka Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinka 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 Tinka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinka Resources has no effect on the direction of Merck i.e., Merck and Tinka Resources go up and down completely randomly.
Pair Corralation between Merck and Tinka Resources
Considering the 90-day investment horizon Merck Company is expected to under-perform the Tinka Resources. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 4.01 times less risky than Tinka Resources. The stock trades about -0.11 of its potential returns per unit of risk. The Tinka Resources Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Tinka Resources Limited on September 1, 2024 and sell it today you would lose (3.00) from holding Tinka Resources Limited or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Tinka Resources Limited
Performance |
| Timeline |
| Merck Company |
| Tinka Resources |
Merck and Tinka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Tinka Resources
The main advantage of trading using opposite Merck and Tinka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Tinka 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 Tinka Resources will offset losses from the drop in Tinka Resources' long position.The idea behind Merck Company and Tinka Resources Limited 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.| Tinka Resources vs. Pampa Metals | Tinka Resources vs. Progressive Planet Solutions | Tinka Resources vs. Searchlight Resources | Tinka Resources vs. Durango Resources |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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