Correlation Between Merck and VNET Group
Can any of the company-specific risk be diversified away by investing in both Merck and VNET Group 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 VNET Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and VNET Group DRC, you can compare the effects of market volatilities on Merck and VNET Group 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 VNET Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and VNET Group.
Diversification Opportunities for Merck and VNET Group
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merck and VNET is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and VNET Group DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VNET Group DRC 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 VNET Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VNET Group DRC has no effect on the direction of Merck i.e., Merck and VNET Group go up and down completely randomly.
Pair Corralation between Merck and VNET Group
Considering the 90-day investment horizon Merck Company is expected to generate 0.41 times more return on investment than VNET Group. However, Merck Company is 2.46 times less risky than VNET Group. It trades about 0.29 of its potential returns per unit of risk. VNET Group DRC is currently generating about 0.05 per unit of risk. If you would invest 8,179 in Merck Company on November 1, 2025 and sell it today you would earn a total of 2,655 from holding Merck Company or generate 32.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. VNET Group DRC
Performance |
| Timeline |
| Merck Company |
| VNET Group DRC |
Merck and VNET Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and VNET Group
The main advantage of trading using opposite Merck and VNET Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, VNET Group 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 VNET Group will offset losses from the drop in VNET Group's long position.The idea behind Merck Company and VNET Group DRC 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.| VNET Group vs. C3 Ai Inc | VNET Group vs. Globant SA | VNET Group vs. Innodata | VNET Group vs. CLARIVATE PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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