Correlation Between Merck and Moleculin Biotech
Can any of the company-specific risk be diversified away by investing in both Merck and Moleculin Biotech 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 Moleculin Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Moleculin Biotech, you can compare the effects of market volatilities on Merck and Moleculin Biotech 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 Moleculin Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Moleculin Biotech.
Diversification Opportunities for Merck and Moleculin Biotech
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Moleculin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Moleculin Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moleculin Biotech 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 Moleculin Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moleculin Biotech has no effect on the direction of Merck i.e., Merck and Moleculin Biotech go up and down completely randomly.
Pair Corralation between Merck and Moleculin Biotech
Considering the 90-day investment horizon Merck Company is expected to under-perform the Moleculin Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 5.49 times less risky than Moleculin Biotech. The stock trades about -0.22 of its potential returns per unit of risk. The Moleculin Biotech is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 254.00 in Moleculin Biotech on August 25, 2024 and sell it today you would earn a total of 19.00 from holding Moleculin Biotech or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Moleculin Biotech
Performance |
| Timeline |
| Merck Company |
| Moleculin Biotech |
Merck and Moleculin Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Moleculin Biotech
The main advantage of trading using opposite Merck and Moleculin Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Moleculin Biotech 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 Moleculin Biotech will offset losses from the drop in Moleculin Biotech's long position.| Merck vs. Capricor Therapeutics | Merck vs. Akari Therapeutics PLC | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings |
| Moleculin Biotech vs. Pulmatrix | Moleculin Biotech vs. Cyclacel Pharmaceuticals | Moleculin Biotech vs. Akari Therapeutics PLC | Moleculin Biotech vs. Bio Path 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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