Correlation Between Merck and Acasti Pharma
Can any of the company-specific risk be diversified away by investing in both Merck and Acasti Pharma 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 Acasti Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Acasti Pharma, you can compare the effects of market volatilities on Merck and Acasti Pharma 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 Acasti Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Acasti Pharma.
Diversification Opportunities for Merck and Acasti Pharma
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Acasti is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Acasti Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acasti Pharma 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 Acasti Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acasti Pharma has no effect on the direction of Merck i.e., Merck and Acasti Pharma go up and down completely randomly.
Pair Corralation between Merck and Acasti Pharma
Considering the 90-day investment horizon Merck Company is expected to under-perform the Acasti Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 3.75 times less risky than Acasti Pharma. The stock trades about -0.02 of its potential returns per unit of risk. The Acasti Pharma is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 264.00 in Acasti Pharma on August 26, 2024 and sell it today you would earn a total of 73.00 from holding Acasti Pharma or generate 27.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.92% |
| Values | Daily Returns |
Merck Company vs. Acasti Pharma
Performance |
| Timeline |
| Merck Company |
| Acasti Pharma |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Merck and Acasti Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Acasti Pharma
The main advantage of trading using opposite Merck and Acasti Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Acasti Pharma 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 Acasti Pharma will offset losses from the drop in Acasti Pharma's long position.| Merck vs. Capricor Therapeutics | Merck vs. Akari Therapeutics PLC | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings |
| Acasti Pharma vs. Tonix Pharmaceuticals Holding | Acasti Pharma vs. Jaguar Animal Health | Acasti Pharma vs. Ibio Inc | Acasti Pharma vs. Akari Therapeutics PLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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