Correlation Between MERCK Kommanditgesells and CanSino Biologics

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

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

Diversification Opportunities for MERCK Kommanditgesells and CanSino Biologics

-0.74

Correlation Coefficient

MERCK Kommanditgesells  CanSino Biologics

Pay attention - limited upside

The 3 months correlation between MERCK and CanSino is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and MERCK Kommanditgesells 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 Kommanditgesellschaft auf are associated (or correlated) with CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and CanSino Biologics go up and down completely randomly.

Pair Corralation between MERCK Kommanditgesells and CanSino Biologics

Assuming the 90 days horizon MERCK Kommanditgesellschaft auf is expected to generate 0.6 times more return on investment than CanSino Biologics. However, MERCK Kommanditgesellschaft auf is 1.66 times less risky than CanSino Biologics. It trades about -0.01 of its potential returns per unit of risk. CanSino Biologics is currently generating about -0.02 per unit of risk. If you would invest  20,174  in MERCK Kommanditgesellschaft auf on October 10, 2024 and sell it today you would lose (5,349) from holding MERCK Kommanditgesellschaft auf or give up 26.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

MERCK Kommanditgesellschaft au  vs.  CanSino Biologics

MERCK Kommanditgesells

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MERCK Kommanditgesellschaft auf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

CanSino Biologics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, CanSino Biologics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MERCK Kommanditgesells and CanSino Biologics

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

The idea behind MERCK Kommanditgesellschaft auf and CanSino Biologics 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.