Correlation Between Merck and Airsculpt Technologies
Can any of the company-specific risk be diversified away by investing in both Merck and Airsculpt Technologies 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 Airsculpt Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Airsculpt Technologies, you can compare the effects of market volatilities on Merck and Airsculpt Technologies 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 Airsculpt Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Airsculpt Technologies.
Diversification Opportunities for Merck and Airsculpt Technologies
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Airsculpt is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Airsculpt Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airsculpt Technologies 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 Airsculpt Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airsculpt Technologies has no effect on the direction of Merck i.e., Merck and Airsculpt Technologies go up and down completely randomly.
Pair Corralation between Merck and Airsculpt Technologies
Considering the 90-day investment horizon Merck Company is expected to under-perform the Airsculpt Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 3.42 times less risky than Airsculpt Technologies. The stock trades about -0.1 of its potential returns per unit of risk. The Airsculpt Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 413.00 in Airsculpt Technologies on August 28, 2024 and sell it today you would earn a total of 311.00 from holding Airsculpt Technologies or generate 75.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Airsculpt Technologies
Performance |
| Timeline |
| Merck Company |
| Airsculpt Technologies |
Merck and Airsculpt Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Airsculpt Technologies
The main advantage of trading using opposite Merck and Airsculpt Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Airsculpt Technologies 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 Airsculpt Technologies will offset losses from the drop in Airsculpt Technologies' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Airsculpt Technologies vs. Acadia Healthcare | Airsculpt Technologies vs. Pennant Group | Airsculpt Technologies vs. Amedisys | Airsculpt Technologies vs. The Ensign Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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