Correlation Between Talanx AG and Merck
Can any of the company-specific risk be diversified away by investing in both Talanx AG and Merck 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 Talanx AG and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and Merck Company, you can compare the effects of market volatilities on Talanx AG 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 Talanx AG with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Merck.
Diversification Opportunities for Talanx AG and Merck
Pay attention - limited upside
The 3 months correlation between Talanx and Merck is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Talanx AG 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 Talanx AG 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 Company has no effect on the direction of Talanx AG i.e., Talanx AG and Merck go up and down completely randomly.
Pair Corralation between Talanx AG and Merck
Assuming the 90 days horizon Talanx AG is expected to generate 0.86 times more return on investment than Merck. However, Talanx AG is 1.17 times less risky than Merck. It trades about 0.1 of its potential returns per unit of risk. Merck Company is currently generating about -0.02 per unit of risk. If you would invest 4,237 in Talanx AG on October 9, 2024 and sell it today you would earn a total of 4,058 from holding Talanx AG or generate 95.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talanx AG vs. Merck Company
Performance |
| Timeline |
| Talanx AG |
| Merck Company |
Talanx AG and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and Merck
The main advantage of trading using opposite Talanx AG and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG 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.| Talanx AG vs. RYMAN HEALTHCAR | Talanx AG vs. Wenzhou Kangning Hospital | Talanx AG vs. Ubisoft Entertainment SA | Talanx AG vs. US Physical Therapy |
| Merck vs. Penta Ocean Construction Co | Merck vs. Granite Construction | Merck vs. DAIRY FARM INTL | Merck vs. Sumitomo Mitsui Construction |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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