Correlation Between Merck and Abeona Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Abeona Therapeutics 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 Merck and Abeona Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Abeona Therapeutics, you can compare the effects of market volatilities on Merck and Abeona Therapeutics 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 Merck with a short position of Abeona Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Abeona Therapeutics.
Diversification Opportunities for Merck and Abeona Therapeutics
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Abeona is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Merck 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 Merck Company are associated (or correlated) with Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Merck i.e., Merck and Abeona Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Abeona Therapeutics
Considering the 90-day investment horizon Merck Company is expected to generate 0.6 times more return on investment than Abeona Therapeutics. However, Merck Company is 1.66 times less risky than Abeona Therapeutics. It trades about -0.08 of its potential returns per unit of risk. Abeona Therapeutics is currently generating about -0.11 per unit of risk. If you would invest 10,423 in Merck Company on August 29, 2024 and sell it today you would lose (261.00) from holding Merck Company or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Abeona Therapeutics
Performance |
| Timeline |
| Merck Company |
| Abeona Therapeutics |
Merck and Abeona Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Abeona Therapeutics
The main advantage of trading using opposite Merck and Abeona Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Abeona Therapeutics 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 Abeona Therapeutics will offset losses from the drop in Abeona Therapeutics' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Abeona Therapeutics vs. Reviva Pharmaceuticals Holdings | Abeona Therapeutics vs. Athira Pharma | Abeona Therapeutics vs. Fortress Biotech | Abeona Therapeutics vs. ACADIA Pharmaceuticals |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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