Correlation Between Merit Medical and Lipocine
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Lipocine 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 Lipocine 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 Lipocine, you can compare the effects of market volatilities on Merit Medical and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Lipocine.
Diversification Opportunities for Merit Medical and Lipocine
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merit and Lipocine is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Merit Medical i.e., Merit Medical and Lipocine go up and down completely randomly.
Pair Corralation between Merit Medical and Lipocine
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.25 times more return on investment than Lipocine. However, Merit Medical Systems is 4.03 times less risky than Lipocine. It trades about 0.31 of its potential returns per unit of risk. Lipocine is currently generating about -0.05 per unit of risk. If you would invest 9,531 in Merit Medical Systems on August 28, 2024 and sell it today you would earn a total of 961.00 from holding Merit Medical Systems or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Lipocine
Performance |
| Timeline |
| Merit Medical Systems |
| Lipocine |
Merit Medical and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Lipocine
The main advantage of trading using opposite Merit Medical and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Lipocine 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 Lipocine will offset losses from the drop in Lipocine's long position.| Merit Medical vs. Nutex Health | Merit Medical vs. Mangoceuticals, Common Stock | Merit Medical vs. Aclarion |
| Lipocine vs. Reviva Pharmaceuticals Holdings | Lipocine vs. ZyVersa Therapeutics | Lipocine vs. Unicycive Therapeutics | Lipocine vs. Checkpoint Therapeutics |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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