Correlation Between Capricor Therapeutics and Merck
Can any of the company-specific risk be diversified away by investing in both Capricor Therapeutics 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 Capricor Therapeutics and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capricor Therapeutics and Merck Company, you can compare the effects of market volatilities on Capricor Therapeutics 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 Capricor Therapeutics with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricor Therapeutics and Merck.
Diversification Opportunities for Capricor Therapeutics and Merck
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capricor and Merck is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Capricor Therapeutics and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Capricor Therapeutics 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 Capricor Therapeutics 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 Capricor Therapeutics i.e., Capricor Therapeutics and Merck go up and down completely randomly.
Pair Corralation between Capricor Therapeutics and Merck
Given the investment horizon of 90 days Capricor Therapeutics is expected to generate 5.09 times more return on investment than Merck. However, Capricor Therapeutics is 5.09 times more volatile than Merck Company. It trades about 0.09 of its potential returns per unit of risk. Merck Company is currently generating about -0.02 per unit of risk. If you would invest 390.00 in Capricor Therapeutics on August 29, 2024 and sell it today you would earn a total of 1,516 from holding Capricor Therapeutics or generate 388.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capricor Therapeutics vs. Merck Company
Performance |
| Timeline |
| Capricor Therapeutics |
| Merck Company |
Capricor Therapeutics and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricor Therapeutics and Merck
The main advantage of trading using opposite Capricor Therapeutics and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricor Therapeutics 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.| Capricor Therapeutics vs. Eliem Therapeutics | Capricor Therapeutics vs. Scpharmaceuticals | Capricor Therapeutics vs. Milestone Pharmaceuticals | Capricor Therapeutics vs. Seres Therapeutics |
| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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