Correlation Between Merck Tbk and Siantar Top

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

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

Diversification Opportunities for Merck Tbk and Siantar Top

0.78

Correlation Coefficient

Merck Tbk  Siantar Top

Poor diversification

The 3 months correlation between Merck and Siantar is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Merck Tbk and Siantar Top Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siantar Top Tbk and Merck Tbk 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 Merck Tbk are associated (or correlated) with Siantar Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siantar Top Tbk has no effect on the direction of Merck Tbk i.e., Merck Tbk and Siantar Top go up and down completely randomly.

Pair Corralation between Merck Tbk and Siantar Top

Assuming the 90 days trading horizon Merck Tbk is expected to generate 1.01 times more return on investment than Siantar Top. However, Merck Tbk is 1.01 times more volatile than Siantar Top Tbk. It trades about 0.03 of its potential returns per unit of risk. Siantar Top Tbk is currently generating about -0.23 per unit of risk. If you would invest  338,000  in Merck Tbk on December 31, 2024 and sell it today you would earn a total of  3,000  from holding Merck Tbk or generate 0.89% return on investment over 90 days.

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

Merck Tbk  vs.  Siantar Top Tbk

Merck Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merck Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Merck Tbk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Siantar Top Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siantar Top Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Merck Tbk and Siantar Top

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

The idea behind Merck Tbk and Siantar Top Tbk 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..