Correlation Between Merck and Rayliant Quantitative

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

By analyzing existing cross correlation between Merck Company and Rayliant Quantitative Developed, you can compare the effects of market volatilities on Merck and Rayliant Quantitative 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 Rayliant Quantitative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Rayliant Quantitative.

Diversification Opportunities for Merck and Rayliant Quantitative

-0.83

Correlation Coefficient

Merck  Rayliant Quantitative

Pay attention - limited upside

The 3 months correlation between Merck and Rayliant is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Rayliant Quantitative Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayliant Quantitative 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 Rayliant Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayliant Quantitative has no effect on the direction of Merck i.e., Merck and Rayliant Quantitative go up and down completely randomly.

Pair Corralation between Merck and Rayliant Quantitative

Considering the 90-day investment horizon Merck Company is expected to under-perform the Rayliant Quantitative. In addition to that, Merck is 1.96 times more volatile than Rayliant Quantitative Developed. It trades about -0.18 of its total potential returns per unit of risk. Rayliant Quantitative Developed is currently generating about 0.26 per unit of volatility. If you would invest  2,977  in Rayliant Quantitative Developed on September 3, 2024 and sell it today you would earn a total of  315.00  from holding Rayliant Quantitative Developed or generate 10.58% return on investment over 90 days.

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

Merck Company  vs.  Rayliant Quantitative Develope

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 unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rayliant Quantitative

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rayliant Quantitative Developed are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Rayliant Quantitative may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Merck and Rayliant Quantitative

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

The idea behind Merck Company and Rayliant Quantitative Developed 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.