Correlation Between Merck and Corbus Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and Corbus Pharmaceuticals 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 Corbus Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Corbus Pharmaceuticals Holding, you can compare the effects of market volatilities on Merck and Corbus Pharmaceuticals 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 Corbus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Corbus Pharmaceuticals.
Diversification Opportunities for Merck and Corbus Pharmaceuticals
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Corbus is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Corbus Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corbus Pharmaceuticals 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 Corbus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corbus Pharmaceuticals has no effect on the direction of Merck i.e., Merck and Corbus Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and Corbus Pharmaceuticals
Considering the 90-day investment horizon Merck Company is expected to under-perform the Corbus Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 2.6 times less risky than Corbus Pharmaceuticals. The stock trades about -0.01 of its potential returns per unit of risk. The Corbus Pharmaceuticals Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,620 in Corbus Pharmaceuticals Holding on August 30, 2024 and sell it today you would earn a total of 144.00 from holding Corbus Pharmaceuticals Holding or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Corbus Pharmaceuticals Holding
Performance |
| Timeline |
| Merck Company |
| Corbus Pharmaceuticals |
Merck and Corbus Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Corbus Pharmaceuticals
The main advantage of trading using opposite Merck and Corbus Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Corbus Pharmaceuticals 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 Corbus Pharmaceuticals will offset losses from the drop in Corbus Pharmaceuticals' long position.| Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
| Corbus Pharmaceuticals vs. Trevi Therapeutics | Corbus Pharmaceuticals vs. Cue Biopharma | Corbus Pharmaceuticals vs. AN2 Therapeutics | Corbus Pharmaceuticals vs. Bioatla |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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