Correlation Between MERCK Kommanditgesells and Gold River

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

Diversification Opportunities for MERCK Kommanditgesells and Gold River

0.72

Correlation Coefficient

MERCK Kommanditgesells  Gold River

Poor diversification

The 3 months correlation between MERCK and Gold is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MERCK Kommanditgesellschaft au and Gold River Prods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold River Prods 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 Gold River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold River Prods has no effect on the direction of MERCK Kommanditgesells i.e., MERCK Kommanditgesells and Gold River go up and down completely randomly.

Pair Corralation between MERCK Kommanditgesells and Gold River

Assuming the 90 days horizon MERCK Kommanditgesells is expected to generate 9.96 times less return on investment than Gold River. But when comparing it to its historical volatility, MERCK Kommanditgesellschaft auf is 10.82 times less risky than Gold River. It trades about 0.13 of its potential returns per unit of risk. Gold River Prods is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Gold River Prods on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Gold River Prods or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.71%
Values	Daily Returns

MERCK Kommanditgesellschaft au  vs.  Gold River Prods

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 unfluctuating 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.

Gold River Prods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold River Prods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gold River unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MERCK Kommanditgesells and Gold River

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

The idea behind MERCK Kommanditgesellschaft auf and Gold River Prods 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.