Correlation Between Merit Medical and CEOTRONICS
Can any of the company-specific risk be diversified away by investing in both Merit Medical and CEOTRONICS 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 Merit Medical and CEOTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and CEOTRONICS, you can compare the effects of market volatilities on Merit Medical and CEOTRONICS 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 Merit Medical with a short position of CEOTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and CEOTRONICS.
Diversification Opportunities for Merit Medical and CEOTRONICS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and CEOTRONICS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS and Merit 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 Merit Medical Systems are associated (or correlated) with CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Merit Medical i.e., Merit Medical and CEOTRONICS go up and down completely randomly.
Pair Corralation between Merit Medical and CEOTRONICS
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.49 times more return on investment than CEOTRONICS. However, Merit Medical Systems is 2.06 times less risky than CEOTRONICS. It trades about -0.26 of its potential returns per unit of risk. CEOTRONICS is currently generating about -0.4 per unit of risk. If you would invest 9,900 in Merit Medical Systems on October 1, 2024 and sell it today you would lose (600.00) from holding Merit Medical Systems or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. CEOTRONICS
Performance |
| Timeline |
| Merit Medical Systems |
| CEOTRONICS |
Merit Medical and CEOTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and CEOTRONICS
The main advantage of trading using opposite Merit Medical and CEOTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, CEOTRONICS 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 CEOTRONICS will offset losses from the drop in CEOTRONICS's long position.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| CEOTRONICS vs. Reinsurance Group of | CEOTRONICS vs. Goosehead Insurance | CEOTRONICS vs. HANOVER INSURANCE | CEOTRONICS vs. SENECA FOODS A |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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