Correlation Between Merck and BioAffinity Technologies
Can any of the company-specific risk be diversified away by investing in both Merck and BioAffinity 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 BioAffinity 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 bioAffinity Technologies Warrant, you can compare the effects of market volatilities on Merck and BioAffinity 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 BioAffinity Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and BioAffinity Technologies.
Diversification Opportunities for Merck and BioAffinity Technologies
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and BioAffinity is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and bioAffinity Technologies Warra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioAffinity 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 BioAffinity Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioAffinity Technologies has no effect on the direction of Merck i.e., Merck and BioAffinity Technologies go up and down completely randomly.
Pair Corralation between Merck and BioAffinity Technologies
Considering the 90-day investment horizon Merck Company is expected to under-perform the BioAffinity Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 13.56 times less risky than BioAffinity Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The bioAffinity Technologies Warrant is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 78.00 in bioAffinity Technologies Warrant on August 29, 2024 and sell it today you would lose (18.00) from holding bioAffinity Technologies Warrant or give up 23.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Merck Company vs. bioAffinity Technologies Warra
Performance |
| Timeline |
| Merck Company |
| BioAffinity Technologies |
Merck and BioAffinity Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and BioAffinity Technologies
The main advantage of trading using opposite Merck and BioAffinity Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, BioAffinity 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 BioAffinity Technologies will offset losses from the drop in BioAffinity Technologies' long position.| Merck vs. Pharvaris BV | Merck vs. Brinker International | Merck vs. Alcoa Corp | Merck vs. Direxion Daily FTSE |
| BioAffinity Technologies vs. bioAffinity Technologies, | BioAffinity Technologies vs. AAP Inc | BioAffinity Technologies vs. Discount Print USA | BioAffinity Technologies vs. HUMANA INC |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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