Correlation Between Merck and Biophytis
Can any of the company-specific risk be diversified away by investing in both Merck and Biophytis 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 Biophytis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Biophytis, you can compare the effects of market volatilities on Merck and Biophytis 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 Biophytis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Biophytis.
Diversification Opportunities for Merck and Biophytis
Almost no diversification
The 3 months correlation between Merck and Biophytis is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Biophytis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis 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 Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis has no effect on the direction of Merck i.e., Merck and Biophytis go up and down completely randomly.
Pair Corralation between Merck and Biophytis
Considering the 90-day investment horizon Merck Company is expected to generate 0.17 times more return on investment than Biophytis. However, Merck Company is 6.0 times less risky than Biophytis. It trades about 0.0 of its potential returns per unit of risk. Biophytis is currently generating about -0.08 per unit of risk. If you would invest 10,449 in Merck Company on September 14, 2024 and sell it today you would lose (274.00) from holding Merck Company or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 53.01% |
| Values | Daily Returns |
Merck Company vs. Biophytis
Performance |
| Timeline |
| Merck Company |
| Biophytis |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Biophytis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Biophytis
The main advantage of trading using opposite Merck and Biophytis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Biophytis 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 Biophytis will offset losses from the drop in Biophytis' long position.| Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
| Biophytis vs. NRx Pharmaceuticals | Biophytis vs. NRX Pharmaceuticals | Biophytis vs. Akari Therapeutics PLC | Biophytis vs. Armata 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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