Correlation Between Merck and Crinetics Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and Crinetics 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 Crinetics 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 Crinetics Pharmaceuticals, you can compare the effects of market volatilities on Merck and Crinetics 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 Crinetics Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Crinetics Pharmaceuticals.
Diversification Opportunities for Merck and Crinetics Pharmaceuticals
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Crinetics is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Crinetics Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crinetics 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 Crinetics Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crinetics Pharmaceuticals has no effect on the direction of Merck i.e., Merck and Crinetics Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and Crinetics Pharmaceuticals
Considering the 90-day investment horizon Merck Company is expected to under-perform the Crinetics Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.82 times less risky than Crinetics Pharmaceuticals. The stock trades about -0.04 of its potential returns per unit of risk. The Crinetics Pharmaceuticals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5,682 in Crinetics Pharmaceuticals on September 4, 2024 and sell it today you would lose (23.00) from holding Crinetics Pharmaceuticals or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Crinetics Pharmaceuticals
Performance |
| Timeline |
| Merck Company |
| Crinetics Pharmaceuticals |
Merck and Crinetics Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Crinetics Pharmaceuticals
The main advantage of trading using opposite Merck and Crinetics Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Crinetics 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 Crinetics Pharmaceuticals will offset losses from the drop in Crinetics Pharmaceuticals' long position.| Merck vs. Crinetics Pharmaceuticals | Merck vs. Enanta Pharmaceuticals | Merck vs. Amicus Therapeutics | Merck vs. Connect Biopharma Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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