Correlation Between Merck and Janux Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Janux 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 Janux 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 Janux Therapeutics, you can compare the effects of market volatilities on Merck and Janux 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 Janux Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Janux Therapeutics.
Diversification Opportunities for Merck and Janux Therapeutics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Janux is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Janux Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janux 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 Janux Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janux Therapeutics has no effect on the direction of Merck i.e., Merck and Janux Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Janux Therapeutics
Considering the 90-day investment horizon Merck Company is expected to under-perform the Janux Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 10.24 times less risky than Janux Therapeutics. The stock trades about 0.0 of its potential returns per unit of risk. The Janux Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,323 in Janux Therapeutics on August 31, 2024 and sell it today you would earn a total of 3,198 from holding Janux Therapeutics or generate 241.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Janux Therapeutics
Performance |
| Timeline |
| Merck Company |
| Janux Therapeutics |
Merck and Janux Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Janux Therapeutics
The main advantage of trading using opposite Merck and Janux Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Janux 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 Janux Therapeutics will offset losses from the drop in Janux Therapeutics' long position.The idea behind Merck Company and Janux Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Janux Therapeutics vs. Mineralys Therapeutics, Common | Janux Therapeutics vs. Eliem Therapeutics | Janux Therapeutics vs. Anebulo Pharmaceuticals | Janux Therapeutics vs. Rezolute |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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