Correlation Between Merck and Pasithea Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Pasithea 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 Pasithea 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 Pasithea Therapeutics Corp, you can compare the effects of market volatilities on Merck and Pasithea 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 Pasithea Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Pasithea Therapeutics.
Diversification Opportunities for Merck and Pasithea Therapeutics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Pasithea is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Pasithea Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasithea 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 Pasithea Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pasithea Therapeutics has no effect on the direction of Merck i.e., Merck and Pasithea Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Pasithea Therapeutics
Considering the 90-day investment horizon Merck Company is expected to generate 0.33 times more return on investment than Pasithea Therapeutics. However, Merck Company is 3.03 times less risky than Pasithea Therapeutics. It trades about -0.22 of its potential returns per unit of risk. Pasithea Therapeutics Corp is currently generating about -0.31 per unit of risk. If you would invest 10,664 in Merck Company on August 23, 2024 and sell it today you would lose (678.00) from holding Merck Company or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Pasithea Therapeutics Corp
Performance |
| Timeline |
| Merck Company |
| Pasithea Therapeutics |
Merck and Pasithea Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Pasithea Therapeutics
The main advantage of trading using opposite Merck and Pasithea Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Pasithea 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 Pasithea Therapeutics will offset losses from the drop in Pasithea Therapeutics' long position.| Merck vs. Johnson Johnson | Merck vs. Small Cap Core | Merck vs. Freedom Holding Corp | Merck vs. Gfl Environmental Holdings |
| Pasithea Therapeutics vs. ZyVersa Therapeutics | Pasithea Therapeutics vs. Sonnet Biotherapeutics Holdings | Pasithea Therapeutics vs. Zura Bio Limited | Pasithea Therapeutics vs. Phio Pharmaceuticals Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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