Correlation Between OSX Brasil and Merck
Can any of the company-specific risk be diversified away by investing in both OSX Brasil and Merck 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 OSX Brasil and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OSX Brasil SA and Merck Co, you can compare the effects of market volatilities on OSX Brasil and Merck 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 OSX Brasil with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of OSX Brasil and Merck.
Diversification Opportunities for OSX Brasil and Merck
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OSX and Merck is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding OSX Brasil SA and Merck Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck and OSX Brasil 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 OSX Brasil SA are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck has no effect on the direction of OSX Brasil i.e., OSX Brasil and Merck go up and down completely randomly.
Pair Corralation between OSX Brasil and Merck
Assuming the 90 days trading horizon OSX Brasil SA is expected to under-perform the Merck. In addition to that, OSX Brasil is 1.15 times more volatile than Merck Co. It trades about -0.14 of its total potential returns per unit of risk. Merck Co is currently generating about 0.09 per unit of volatility. If you would invest 7,343 in Merck Co on September 25, 2024 and sell it today you would earn a total of 385.00 from holding Merck Co or generate 5.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
OSX Brasil SA vs. Merck Co
Performance |
Timeline |
OSX Brasil SA |
Merck |
OSX Brasil and Merck Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with OSX Brasil and Merck
The main advantage of trading using opposite OSX Brasil and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OSX Brasil position performs unexpectedly, Merck 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 will offset losses from the drop in Merck's long position.OSX Brasil vs. Ita Unibanco Holding | OSX Brasil vs. Ita Unibanco Holding | OSX Brasil vs. Banco Santander SA | OSX Brasil vs. Banco Santander SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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