Correlation Between MERCK Kommanditgesells and Eisai Co

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

Diversification Opportunities for MERCK Kommanditgesells and Eisai Co

-0.04

Correlation Coefficient

MERCK Kommanditgesells  Eisai Co

Good diversification

The 3 months correlation between MERCK and Eisai is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai Co 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 Eisai Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai Co has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and Eisai Co go up and down completely randomly.

Pair Corralation between MERCK Kommanditgesells and Eisai Co

Assuming the 90 days horizon MERCK Kommanditgesellschaft auf is expected to under-perform the Eisai Co. But the pink sheet apears to be less risky and, when comparing its historical volatility, MERCK Kommanditgesellschaft auf is 1.37 times less risky than Eisai Co. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Eisai Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,746  in Eisai Co on December 29, 2024 and sell it today you would earn a total of  94.00  from holding Eisai Co or generate 3.42% return on investment over 90 days.

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

MERCK Kommanditgesellschaft au  vs.  Eisai Co

MERCK Kommanditgesells

Risk-Adjusted Performance

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 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.

Eisai Co

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eisai Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Eisai Co may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MERCK Kommanditgesells and Eisai Co

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

The idea behind MERCK Kommanditgesellschaft auf and Eisai Co 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.