Correlation Between Merck and Zinzino AB
Can any of the company-specific risk be diversified away by investing in both Merck and Zinzino AB 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 Zinzino AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Zinzino AB, you can compare the effects of market volatilities on Merck and Zinzino AB 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 Zinzino AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Zinzino AB.
Diversification Opportunities for Merck and Zinzino AB
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Zinzino is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Zinzino AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinzino AB 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 Zinzino AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinzino AB has no effect on the direction of Merck i.e., Merck and Zinzino AB go up and down completely randomly.
Pair Corralation between Merck and Zinzino AB
Considering the 90-day investment horizon Merck is expected to generate 1101.7 times less return on investment than Zinzino AB. But when comparing it to its historical volatility, Merck Company is 8.78 times less risky than Zinzino AB. It trades about 0.0 of its potential returns per unit of risk. Zinzino AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Zinzino AB on September 3, 2024 and sell it today you would earn a total of 530.00 from holding Zinzino AB or generate 212.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 34.95% |
| Values | Daily Returns |
Merck Company vs. Zinzino AB
Performance |
| Timeline |
| Merck Company |
| Zinzino AB |
Merck and Zinzino AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Zinzino AB
The main advantage of trading using opposite Merck and Zinzino AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Zinzino AB 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 Zinzino AB will offset losses from the drop in Zinzino AB's long position.| Merck vs. Pfizer Inc | Merck vs. Johnson Johnson | Merck vs. Highway Holdings Limited | Merck vs. QCR Holdings |
| Zinzino AB vs. Apple Inc | Zinzino AB vs. Microsoft | Zinzino AB vs. Amazon Inc | Zinzino AB vs. Alphabet Inc Class C |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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