Correlation Between Merck and WeTrade Group

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

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

Diversification Opportunities for Merck and WeTrade Group

-0.32

Correlation Coefficient

Merck  WeTrade Group

Very good diversification

The 3 months correlation between Merck and WeTrade is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and WeTrade Group Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WeTrade Group Ordinary 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 WeTrade Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WeTrade Group Ordinary has no effect on the direction of Merck i.e., Merck and WeTrade Group go up and down completely randomly.

Pair Corralation between Merck and WeTrade Group

If you would invest  9,858  in Merck Company on September 13, 2024 and sell it today you would earn a total of  203.00  from holding Merck Company or generate 2.06% return on investment over 90 days.

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

Merck Company  vs.  WeTrade Group Ordinary

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 abnormal 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.

WeTrade Group Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WeTrade Group Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WeTrade Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Merck and WeTrade Group

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

The idea behind Merck Company and WeTrade Group Ordinary 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.