Correlation Between Nutralife Biosciences and Merck KGaA

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

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

Diversification Opportunities for Nutralife Biosciences and Merck KGaA

0.0

Correlation Coefficient

Nutralife Biosciences  Merck KGaA

Pay attention - limited upside

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

Pair Corralation between Nutralife Biosciences and Merck KGaA

If you would invest (100.00) in Nutralife Biosciences on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Nutralife Biosciences or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nutralife Biosciences  vs.  Merck KGaA ADR

Nutralife Biosciences

Risk-Adjusted Performance

Very Weak

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

Merck KGaA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merck KGaA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Merck KGaA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nutralife Biosciences and Merck KGaA

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

The idea behind Nutralife Biosciences and Merck KGaA ADR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.