Correlation Between Genomma Lab and Merck KGaA

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

By analyzing existing cross correlation between Genomma Lab Internacional and Merck KGaA ADR, you can compare the effects of market volatilities on Genomma Lab and Merck KGaA 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 Genomma Lab with a short position of Merck KGaA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genomma Lab and Merck KGaA.

Diversification Opportunities for Genomma Lab and Merck KGaA

0.0

Correlation Coefficient

Genomma Lab  Merck KGaA

Pay attention - limited upside

The 3 months correlation between Genomma and Merck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Genomma Lab Internacional and Merck KGaA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck KGaA ADR and Genomma Lab 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 Genomma Lab Internacional are associated (or correlated) with Merck KGaA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck KGaA ADR has no effect on the direction of Genomma Lab i.e., Genomma Lab and Merck KGaA go up and down completely randomly.

Pair Corralation between Genomma Lab and Merck KGaA

If you would invest (100.00) in Genomma Lab Internacional on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Genomma Lab Internacional or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Genomma Lab Internacional  vs.  Merck KGaA ADR

Genomma Lab Internacional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genomma Lab Internacional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Genomma Lab is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Merck KGaA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merck KGaA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Merck KGaA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genomma Lab and Merck KGaA

The main advantage of trading using opposite Genomma Lab and Merck KGaA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genomma Lab position performs unexpectedly, Merck KGaA 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 KGaA will offset losses from the drop in Merck KGaA's long position.

The idea behind Genomma Lab Internacional and Merck KGaA ADR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.