Correlation Between Merck and Applied Molecular
Can any of the company-specific risk be diversified away by investing in both Merck and Applied Molecular 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 Applied Molecular into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Applied Molecular Transport, you can compare the effects of market volatilities on Merck and Applied Molecular 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 Applied Molecular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Applied Molecular.
Diversification Opportunities for Merck and Applied Molecular
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Applied is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Applied Molecular Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Molecular 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 Applied Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Molecular has no effect on the direction of Merck i.e., Merck and Applied Molecular go up and down completely randomly.
Pair Corralation between Merck and Applied Molecular
If you would invest 33.00 in Applied Molecular Transport on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Applied Molecular Transport or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
Merck Company vs. Applied Molecular Transport
Performance |
| Timeline |
| Merck Company |
| Applied Molecular |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Applied Molecular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Applied Molecular
The main advantage of trading using opposite Merck and Applied Molecular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Applied Molecular 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 Applied Molecular will offset losses from the drop in Applied Molecular's long position.| Merck vs. Capricor Therapeutics | Merck vs. Akari Therapeutics PLC | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings |
| Applied Molecular vs. Aileron Therapeutics | Applied Molecular vs. Bio Path Holdings | Applied Molecular vs. Benitec Biopharma Ltd | Applied Molecular vs. Aerovate 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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