Correlation Between Artemis Resources and Merck

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

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

Diversification Opportunities for Artemis Resources and Merck

0.68

Correlation Coefficient

Artemis Resources  Merck

Poor diversification

The 3 months correlation between Artemis and Merck is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Artemis Resources and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Artemis Resources 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 Artemis Resources 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 Company has no effect on the direction of Artemis Resources i.e., Artemis Resources and Merck go up and down completely randomly.

Pair Corralation between Artemis Resources and Merck

Assuming the 90 days horizon Artemis Resources is expected to generate 26.49 times more return on investment than Merck. However, Artemis Resources is 26.49 times more volatile than Merck Company. It trades about 0.07 of its potential returns per unit of risk. Merck Company is currently generating about -0.16 per unit of risk. If you would invest  1.30  in Artemis Resources on September 2, 2024 and sell it today you would lose (0.80) from holding Artemis Resources or give up 61.54% of portfolio value over 90 days.

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

Artemis Resources  vs.  Merck Company

Artemis Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artemis Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Artemis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

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 abnormal performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Artemis Resources and Merck

The main advantage of trading using opposite Artemis Resources and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artemis Resources 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.

The idea behind Artemis Resources and Merck Company 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.