Correlation Between Merit Medical and COMBA TELECOM
Can any of the company-specific risk be diversified away by investing in both Merit Medical and COMBA TELECOM 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 COMBA TELECOM 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 COMBA TELECOM SYST, you can compare the effects of market volatilities on Merit Medical and COMBA TELECOM 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 COMBA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and COMBA TELECOM.
Diversification Opportunities for Merit Medical and COMBA TELECOM
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and COMBA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST 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 COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of Merit Medical i.e., Merit Medical and COMBA TELECOM go up and down completely randomly.
Pair Corralation between Merit Medical and COMBA TELECOM
Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 1.33 times more return on investment than COMBA TELECOM. However, Merit Medical is 1.33 times more volatile than COMBA TELECOM SYST. It trades about 0.3 of its potential returns per unit of risk. COMBA TELECOM SYST is currently generating about -0.22 per unit of risk. If you would invest 8,700 in Merit Medical Systems on August 27, 2024 and sell it today you would earn a total of 1,250 from holding Merit Medical Systems or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. COMBA TELECOM SYST
Performance |
| Timeline |
| Merit Medical Systems |
| COMBA TELECOM SYST |
Merit Medical and COMBA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and COMBA TELECOM
The main advantage of trading using opposite Merit Medical and COMBA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, COMBA TELECOM 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 COMBA TELECOM will offset losses from the drop in COMBA TELECOM's long position.| Merit Medical vs. Ming Le Sports | Merit Medical vs. Ribbon Communications | Merit Medical vs. Chunghwa Telecom Co | Merit Medical vs. Entravision Communications |
| COMBA TELECOM vs. Apple Inc | COMBA TELECOM vs. Apple Inc | COMBA TELECOM vs. Apple Inc | COMBA TELECOM vs. Microsoft |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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