Correlation Between Rimrock Gold and MERCK Kommanditgesells

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

By analyzing existing cross correlation between Rimrock Gold Corp and MERCK Kommanditgesellschaft auf, you can compare the effects of market volatilities on Rimrock Gold and MERCK Kommanditgesells 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 Rimrock Gold with a short position of MERCK Kommanditgesells. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rimrock Gold and MERCK Kommanditgesells.

Diversification Opportunities for Rimrock Gold and MERCK Kommanditgesells

-0.12

Correlation Coefficient

Rimrock Gold  MERCK Kommanditgesells

Good diversification

The 3 months correlation between Rimrock and MERCK is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Rimrock Gold Corp and MERCK Kommanditgesellschaft au in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK Kommanditgesells and Rimrock Gold 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 Rimrock Gold Corp are associated (or correlated) with MERCK Kommanditgesells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK Kommanditgesells has no effect on the direction of Rimrock Gold i.e., Rimrock Gold and MERCK Kommanditgesells go up and down completely randomly.

Pair Corralation between Rimrock Gold and MERCK Kommanditgesells

Given the investment horizon of 90 days Rimrock Gold Corp is expected to generate 4.28 times more return on investment than MERCK Kommanditgesells. However, Rimrock Gold is 4.28 times more volatile than MERCK Kommanditgesellschaft auf. It trades about 0.06 of its potential returns per unit of risk. MERCK Kommanditgesellschaft auf is currently generating about -0.01 per unit of risk. If you would invest  0.03  in Rimrock Gold Corp on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Rimrock Gold Corp or generate 0.0% return on investment over 90 days.

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

Rimrock Gold Corp  vs.  MERCK Kommanditgesellschaft au

Rimrock Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

MERCK Kommanditgesells

Risk-Adjusted Performance

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 nearly stable basic indicators, MERCK Kommanditgesells is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rimrock Gold and MERCK Kommanditgesells

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

The idea behind Rimrock Gold Corp and MERCK Kommanditgesellschaft auf 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.