Correlation Between Merck and Alpine Immune
Can any of the company-specific risk be diversified away by investing in both Merck and Alpine Immune 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 Alpine Immune into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Alpine Immune Sciences, you can compare the effects of market volatilities on Merck and Alpine Immune 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 Alpine Immune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Alpine Immune.
Diversification Opportunities for Merck and Alpine Immune
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Alpine is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Alpine Immune Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Immune Sciences 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 Alpine Immune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Immune Sciences has no effect on the direction of Merck i.e., Merck and Alpine Immune go up and down completely randomly.
Pair Corralation between Merck and Alpine Immune
Considering the 90-day investment horizon Merck is expected to generate 64.72 times less return on investment than Alpine Immune. But when comparing it to its historical volatility, Merck Company is 3.02 times less risky than Alpine Immune. It trades about 0.01 of its potential returns per unit of risk. Alpine Immune Sciences is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 777.00 in Alpine Immune Sciences on September 1, 2024 and sell it today you would earn a total of 460.00 from holding Alpine Immune Sciences or generate 59.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 25.05% |
| Values | Daily Returns |
Merck Company vs. Alpine Immune Sciences
Performance |
| Timeline |
| Merck Company |
| Alpine Immune Sciences |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Alpine Immune Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Alpine Immune
The main advantage of trading using opposite Merck and Alpine Immune positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Alpine Immune 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 Alpine Immune will offset losses from the drop in Alpine Immune's long position.The idea behind Merck Company and Alpine Immune Sciences pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Alpine Immune vs. Terns Pharmaceuticals | Alpine Immune vs. Day One Biopharmaceuticals | Alpine Immune vs. Acumen Pharmaceuticals | Alpine Immune vs. Amylyx 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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