Correlation Between Apollo Medical and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Apollo Medical and Merit Medical 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 Apollo Medical and Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Medical Holdings and Merit Medical Systems, you can compare the effects of market volatilities on Apollo Medical and Merit Medical 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 Apollo Medical with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Medical and Merit Medical.
Diversification Opportunities for Apollo Medical and Merit Medical
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apollo and Merit is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and Apollo Medical 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 Apollo Medical Holdings are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Apollo Medical i.e., Apollo Medical and Merit Medical go up and down completely randomly.
Pair Corralation between Apollo Medical and Merit Medical
Assuming the 90 days horizon Apollo Medical Holdings is expected to generate 1.04 times more return on investment than Merit Medical. However, Apollo Medical is 1.04 times more volatile than Merit Medical Systems. It trades about 0.23 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.23 per unit of risk. If you would invest 3,580 in Apollo Medical Holdings on August 31, 2024 and sell it today you would earn a total of 420.00 from holding Apollo Medical Holdings or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Medical Holdings vs. Merit Medical Systems
Performance |
| Timeline |
| Apollo Medical Holdings |
| Merit Medical Systems |
Apollo Medical and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Medical and Merit Medical
The main advantage of trading using opposite Apollo Medical and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Medical position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Apollo Medical vs. Apple Inc | Apollo Medical vs. Apple Inc | Apollo Medical vs. Apple Inc | Apollo Medical vs. Apple Inc |
| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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