Correlation Between Sea and MERCK
Specify exactly 2 symbols:
By analyzing existing cross correlation between Sea and MERCK INC, you can compare the effects of market volatilities on Sea and MERCK 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 Sea with a short position of MERCK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and MERCK.
Diversification Opportunities for Sea and MERCK
Very weak diversification
The 3 months correlation between Sea and MERCK is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sea and MERCK INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK INC and Sea 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 Sea are associated (or correlated) with MERCK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK INC has no effect on the direction of Sea i.e., Sea and MERCK go up and down completely randomly.
Pair Corralation between Sea and MERCK
Allowing for the 90-day total investment horizon Sea is expected to generate 6.41 times more return on investment than MERCK. However, Sea is 6.41 times more volatile than MERCK INC. It trades about 0.15 of its potential returns per unit of risk. MERCK INC is currently generating about 0.25 per unit of risk. If you would invest 11,953 in Sea on November 29, 2024 and sell it today you would earn a total of 689.00 from holding Sea or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. MERCK INC
Performance |
| Timeline |
| Sea |
| MERCK INC |
Sea and MERCK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and MERCK
The main advantage of trading using opposite Sea and MERCK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, MERCK 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 MERCK will offset losses from the drop in MERCK's long position.The idea behind Sea and MERCK INC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |