Correlation Between HempAmericana and MERCK Kommanditgesells

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

By analyzing existing cross correlation between HempAmericana and MERCK Kommanditgesellschaft auf, you can compare the effects of market volatilities on HempAmericana and MERCK Kommanditgesells 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 HempAmericana with a short position of MERCK Kommanditgesells. Check out your portfolio center. Please also check ongoing floating volatility patterns of HempAmericana and MERCK Kommanditgesells.

Diversification Opportunities for HempAmericana and MERCK Kommanditgesells

0.23

Correlation Coefficient

HempAmericana  MERCK Kommanditgesells

Modest diversification

The 3 months correlation between HempAmericana and MERCK is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HempAmericana and MERCK Kommanditgesellschaft au in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK Kommanditgesells and HempAmericana 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 HempAmericana are associated (or correlated) with MERCK Kommanditgesells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK Kommanditgesells has no effect on the direction of HempAmericana i.e., HempAmericana and MERCK Kommanditgesells go up and down completely randomly.

Pair Corralation between HempAmericana and MERCK Kommanditgesells

Given the investment horizon of 90 days HempAmericana is expected to generate 72.81 times more return on investment than MERCK Kommanditgesells. However, HempAmericana is 72.81 times more volatile than MERCK Kommanditgesellschaft auf. It trades about 0.17 of its potential returns per unit of risk. MERCK Kommanditgesellschaft auf is currently generating about 0.03 per unit of risk. If you would invest  0.01  in HempAmericana on November 20, 2024 and sell it today you would earn a total of  0.00  from holding HempAmericana or generate 0.0% return on investment over 90 days.

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

HempAmericana  vs.  MERCK Kommanditgesellschaft au

HempAmericana

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HempAmericana are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, HempAmericana reported solid returns over the last few months and may actually be approaching a breakup point.

MERCK Kommanditgesells

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MERCK Kommanditgesellschaft auf are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MERCK Kommanditgesells is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HempAmericana and MERCK Kommanditgesells

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

The idea behind HempAmericana and MERCK Kommanditgesellschaft auf 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.