Correlation Between MERCK Kommanditgesells and Eco Growth

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

Diversification Opportunities for MERCK Kommanditgesells and Eco Growth

0.82

Correlation Coefficient

MERCK Kommanditgesells  Eco Growth

Very poor diversification

The 3 months correlation between MERCK and Eco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and Eco Growth Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Growth Strategies 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 Eco Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Growth Strategies has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and Eco Growth go up and down completely randomly.

Pair Corralation between MERCK Kommanditgesells and Eco Growth

Assuming the 90 days horizon MERCK Kommanditgesellschaft auf is expected to under-perform the Eco Growth. But the pink sheet apears to be less risky and, when comparing its historical volatility, MERCK Kommanditgesellschaft auf is 11.83 times less risky than Eco Growth. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Eco Growth Strategies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Eco Growth Strategies on October 6, 2024 and sell it today you would lose (4.10) from holding Eco Growth Strategies or give up 45.56% of portfolio value over 90 days.

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

MERCK Kommanditgesellschaft au  vs.  Eco Growth Strategies

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eco Growth Strategies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Growth Strategies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Eco Growth unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MERCK Kommanditgesells and Eco Growth

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

The idea behind MERCK Kommanditgesellschaft auf and Eco Growth Strategies 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.