Correlation Between Merck and BAIDU
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By analyzing existing cross correlation between Merck Company and BAIDU INC 3625, you can compare the effects of market volatilities on Merck and BAIDU 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 BAIDU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and BAIDU.
Diversification Opportunities for Merck and BAIDU
Pay attention - limited upside
The 3 months correlation between Merck and BAIDU is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and BAIDU INC 3625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIDU INC 3625 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 BAIDU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIDU INC 3625 has no effect on the direction of Merck i.e., Merck and BAIDU go up and down completely randomly.
Pair Corralation between Merck and BAIDU
Considering the 90-day investment horizon Merck Company is expected to under-perform the BAIDU. In addition to that, Merck is 4.08 times more volatile than BAIDU INC 3625. It trades about -0.22 of its total potential returns per unit of risk. BAIDU INC 3625 is currently generating about -0.36 per unit of volatility. If you would invest 9,799 in BAIDU INC 3625 on August 23, 2024 and sell it today you would lose (53.00) from holding BAIDU INC 3625 or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 21.74% |
| Values | Daily Returns |
Merck Company vs. BAIDU INC 3625
Performance |
| Timeline |
| Merck Company |
| BAIDU INC 3625 |
Merck and BAIDU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and BAIDU
The main advantage of trading using opposite Merck and BAIDU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, BAIDU 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 BAIDU will offset losses from the drop in BAIDU's long position.| Merck vs. Johnson Johnson | Merck vs. Small Cap Core | Merck vs. Freedom Holding Corp | Merck vs. Gfl Environmental 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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