Correlation Between Merck and Hyundai
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By analyzing existing cross correlation between Merck Company and Hyundai Capital America, you can compare the effects of market volatilities on Merck and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Hyundai.
Diversification Opportunities for Merck and Hyundai
Excellent diversification
The 3 months correlation between Merck and Hyundai is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Hyundai Capital America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Capital America 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Capital America has no effect on the direction of Merck i.e., Merck and Hyundai go up and down completely randomly.
Pair Corralation between Merck and Hyundai
Considering the 90-day investment horizon Merck Company is expected to generate 2.66 times more return on investment than Hyundai. However, Merck is 2.66 times more volatile than Hyundai Capital America. It trades about 0.0 of its potential returns per unit of risk. Hyundai Capital America is currently generating about 0.0 per unit of risk. If you would invest 10,333 in Merck Company on September 1, 2024 and sell it today you would lose (169.00) from holding Merck Company or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 35.35% |
| Values | Daily Returns |
Merck Company vs. Hyundai Capital America
Performance |
| Timeline |
| Merck Company |
| Hyundai Capital America |
Merck and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Hyundai
The main advantage of trading using opposite Merck and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.The idea behind Merck Company and Hyundai Capital America 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.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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