Correlation Between Genertec Universal and Merck

Can any of the company-specific risk be diversified away by investing in both Genertec Universal 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 Genertec Universal and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genertec Universal Medical and Merck Co, you can compare the effects of market volatilities on Genertec Universal 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 Genertec Universal with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genertec Universal and Merck.

Diversification Opportunities for Genertec Universal and Merck

-0.7

Correlation Coefficient

Genertec Universal  Merck

Excellent diversification

The 3 months correlation between Genertec and Merck is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Genertec Universal Medical and Merck Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck and Genertec Universal 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 Genertec Universal Medical 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 has no effect on the direction of Genertec Universal i.e., Genertec Universal and Merck go up and down completely randomly.

Pair Corralation between Genertec Universal and Merck

Assuming the 90 days horizon Genertec Universal Medical is expected to generate 1.62 times more return on investment than Merck. However, Genertec Universal is 1.62 times more volatile than Merck Co. It trades about 0.09 of its potential returns per unit of risk. Merck Co is currently generating about -0.06 per unit of risk. If you would invest  57.00  in Genertec Universal Medical on December 21, 2024 and sell it today you would earn a total of  9.00  from holding Genertec Universal Medical or generate 15.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Genertec Universal Medical  vs.  Merck Co

Genertec Universal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Genertec Universal reported solid returns over the last few months and may actually be approaching a breakup point.

Merck

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merck Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Genertec Universal and Merck

The main advantage of trading using opposite Genertec Universal and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genertec Universal 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 Genertec Universal Medical and Merck Co 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.