Correlation Between MERCK Kommanditgesells and Golden Developing

Can any of the company-specific risk be diversified away by investing in both MERCK Kommanditgesells and Golden Developing 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 Golden Developing 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 Golden Developing Solutions, you can compare the effects of market volatilities on MERCK Kommanditgesells and Golden Developing 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 Golden Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of MERCK Kommanditgesells and Golden Developing.

Diversification Opportunities for MERCK Kommanditgesells and Golden Developing

0.69

Correlation Coefficient

MERCK Kommanditgesells  Golden Developing

Poor diversification

The 3 months correlation between MERCK and Golden is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and Golden Developing Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Developing 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 Golden Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Developing has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and Golden Developing go up and down completely randomly.

Pair Corralation between MERCK Kommanditgesells and Golden Developing

If you would invest  0.01  in Golden Developing Solutions on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Golden Developing Solutions or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

MERCK Kommanditgesellschaft au  vs.  Golden Developing Solutions

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 unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Golden Developing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Developing Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with MERCK Kommanditgesells and Golden Developing

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

The idea behind MERCK Kommanditgesellschaft auf and Golden Developing Solutions 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.