Correlation Between ALBIS LEASING and Merck

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

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

Diversification Opportunities for ALBIS LEASING and Merck

-0.39

Correlation Coefficient

ALBIS LEASING  Merck

Very good diversification

The 3 months correlation between ALBIS and Merck is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ALBIS LEASING AG and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and ALBIS LEASING 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 ALBIS LEASING 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 ALBIS LEASING i.e., ALBIS LEASING and Merck go up and down completely randomly.

Pair Corralation between ALBIS LEASING and Merck

Assuming the 90 days trading horizon ALBIS LEASING AG is expected to under-perform the Merck. In addition to that, ALBIS LEASING is 1.04 times more volatile than Merck Company. It trades about -0.07 of its total potential returns per unit of risk. Merck Company is currently generating about -0.03 per unit of volatility. If you would invest  14,385  in Merck Company on October 11, 2024 and sell it today you would lose (80.00) from holding Merck Company or give up 0.56% of portfolio value over 90 days.

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

ALBIS LEASING AG  vs.  Merck Company

ALBIS LEASING AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALBIS LEASING AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, ALBIS LEASING is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Merck Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ALBIS LEASING and Merck

The main advantage of trading using opposite ALBIS LEASING and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALBIS LEASING 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 ALBIS LEASING AG and Merck Company 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.