Correlation Between Merck and GlycoMimetics
Can any of the company-specific risk be diversified away by investing in both Merck and GlycoMimetics 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 GlycoMimetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and GlycoMimetics, you can compare the effects of market volatilities on Merck and GlycoMimetics 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 GlycoMimetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and GlycoMimetics.
Diversification Opportunities for Merck and GlycoMimetics
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and GlycoMimetics is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and GlycoMimetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlycoMimetics 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 GlycoMimetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlycoMimetics has no effect on the direction of Merck i.e., Merck and GlycoMimetics go up and down completely randomly.
Pair Corralation between Merck and GlycoMimetics
Considering the 90-day investment horizon Merck Company is expected to under-perform the GlycoMimetics. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 31.21 times less risky than GlycoMimetics. The stock trades about -0.08 of its potential returns per unit of risk. The GlycoMimetics is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 17.00 in GlycoMimetics on August 29, 2024 and sell it today you would earn a total of 15.00 from holding GlycoMimetics or generate 88.24% 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. GlycoMimetics
Performance |
| Timeline |
| Merck Company |
| GlycoMimetics |
Merck and GlycoMimetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and GlycoMimetics
The main advantage of trading using opposite Merck and GlycoMimetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, GlycoMimetics 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 GlycoMimetics will offset losses from the drop in GlycoMimetics' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| GlycoMimetics vs. Mineralys Therapeutics, Common | GlycoMimetics vs. Foghorn Therapeutics | GlycoMimetics vs. Inventiva Sa | GlycoMimetics vs. Dyne 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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