Correlation Between Merck and Corcept Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Corcept Therapeutics 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 Corcept Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Corcept Therapeutics Incorporated, you can compare the effects of market volatilities on Merck and Corcept Therapeutics 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 Corcept Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Corcept Therapeutics.
Diversification Opportunities for Merck and Corcept Therapeutics
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Corcept is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Corcept Therapeutics Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corcept Therapeutics 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 Corcept Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corcept Therapeutics has no effect on the direction of Merck i.e., Merck and Corcept Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Corcept Therapeutics
Considering the 90-day investment horizon Merck Company is expected to under-perform the Corcept Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.51 times less risky than Corcept Therapeutics. The stock trades about 0.0 of its potential returns per unit of risk. The Corcept Therapeutics Incorporated is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,286 in Corcept Therapeutics Incorporated on August 27, 2024 and sell it today you would earn a total of 3,468 from holding Corcept Therapeutics Incorporated or generate 151.71% 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. Corcept Therapeutics Incorpora
Performance |
| Timeline |
| Merck Company |
| Corcept Therapeutics |
Merck and Corcept Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Corcept Therapeutics
The main advantage of trading using opposite Merck and Corcept Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Corcept Therapeutics 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 Corcept Therapeutics will offset losses from the drop in Corcept Therapeutics' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Corcept Therapeutics vs. Ideaya Biosciences | Corcept Therapeutics vs. AnaptysBio | Corcept Therapeutics vs. MeiraGTx Holdings PLC | Corcept Therapeutics vs. Keros 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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