Correlation Between Merck and Cue Biopharma
Can any of the company-specific risk be diversified away by investing in both Merck and Cue Biopharma 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 Cue Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Cue Biopharma, you can compare the effects of market volatilities on Merck and Cue Biopharma 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 Cue Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Cue Biopharma.
Diversification Opportunities for Merck and Cue Biopharma
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Cue is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Cue Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cue Biopharma 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 Cue Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cue Biopharma has no effect on the direction of Merck i.e., Merck and Cue Biopharma go up and down completely randomly.
Pair Corralation between Merck and Cue Biopharma
Considering the 90-day investment horizon Merck Company is expected to generate 0.18 times more return on investment than Cue Biopharma. However, Merck Company is 5.59 times less risky than Cue Biopharma. It trades about -0.08 of its potential returns per unit of risk. Cue Biopharma is currently generating about -0.26 per unit of risk. If you would invest 10,423 in Merck Company on August 29, 2024 and sell it today you would lose (261.00) from holding Merck Company or give up 2.5% 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. Cue Biopharma
Performance |
| Timeline |
| Merck Company |
| Cue Biopharma |
Merck and Cue Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Cue Biopharma
The main advantage of trading using opposite Merck and Cue Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Cue Biopharma 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 Cue Biopharma will offset losses from the drop in Cue Biopharma's long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Cue Biopharma vs. Coya Therapeutics, Common | Cue Biopharma vs. Lantern Pharma | Cue Biopharma vs. Fennec Pharmaceuticals | Cue Biopharma vs. Eliem 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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