Correlation Between Merck and Caspian Services
Can any of the company-specific risk be diversified away by investing in both Merck and Caspian Services 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 Caspian Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Caspian Services, you can compare the effects of market volatilities on Merck and Caspian Services 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 Caspian Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Caspian Services.
Diversification Opportunities for Merck and Caspian Services
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Caspian is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Caspian Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Services 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 Caspian Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Services has no effect on the direction of Merck i.e., Merck and Caspian Services go up and down completely randomly.
Pair Corralation between Merck and Caspian Services
Considering the 90-day investment horizon Merck Company is expected to under-perform the Caspian Services. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 36.39 times less risky than Caspian Services. The stock trades about -0.01 of its potential returns per unit of risk. The Caspian Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.11 in Caspian Services on October 4, 2024 and sell it today you would earn a total of 0.29 from holding Caspian Services or generate 263.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
Merck Company vs. Caspian Services
Performance |
Timeline |
Merck Company |
Caspian Services |
Merck and Caspian Services Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and Caspian Services
The main advantage of trading using opposite Merck and Caspian Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Caspian Services 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 Caspian Services will offset losses from the drop in Caspian Services' long position.Merck vs. Agilent Technologies | Merck vs. Equillium | Merck vs. 23Andme Holding Co | Merck vs. DiaMedica Therapeutics |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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