Correlation Between Merck and Tsumura

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

By analyzing existing cross correlation between Merck Company and Tsumura Co, you can compare the effects of market volatilities on Merck and Tsumura 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 with a short position of Tsumura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Tsumura.

Diversification Opportunities for Merck and Tsumura

0.0

Correlation Coefficient

Merck  Tsumura

Pay attention - limited upside

The 3 months correlation between Merck and Tsumura is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Tsumura Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsumura and Merck 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 Company are associated (or correlated) with Tsumura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsumura has no effect on the direction of Merck i.e., Merck and Tsumura go up and down completely randomly.

Pair Corralation between Merck and Tsumura

If you would invest  2,360  in Tsumura Co on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Tsumura Co or generate 0.0% return on investment over 90 days.

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

Merck Company  vs.  Tsumura Co

Merck Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merck Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Tsumura

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsumura Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tsumura is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Merck and Tsumura

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

The idea behind Merck Company and Tsumura 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.