Correlation Between Merck and PepperLime Health
Can any of the company-specific risk be diversified away by investing in both Merck and PepperLime Health 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 PepperLime Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and PepperLime Health Acquisition, you can compare the effects of market volatilities on Merck and PepperLime Health 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 PepperLime Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and PepperLime Health.
Diversification Opportunities for Merck and PepperLime Health
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and PepperLime is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and PepperLime Health Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepperLime Health 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 PepperLime Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepperLime Health has no effect on the direction of Merck i.e., Merck and PepperLime Health go up and down completely randomly.
Pair Corralation between Merck and PepperLime Health
Considering the 90-day investment horizon Merck Company is expected to under-perform the PepperLime Health. In addition to that, Merck is 4.82 times more volatile than PepperLime Health Acquisition. It trades about 0.0 of its total potential returns per unit of risk. PepperLime Health Acquisition is currently generating about 0.08 per unit of volatility. If you would invest 1,028 in PepperLime Health Acquisition on October 7, 2024 and sell it today you would earn a total of 29.00 from holding PepperLime Health Acquisition or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 26.21% |
| Values | Daily Returns |
Merck Company vs. PepperLime Health Acquisition
Performance |
| Timeline |
| Merck Company |
| PepperLime Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and PepperLime Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and PepperLime Health
The main advantage of trading using opposite Merck and PepperLime Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, PepperLime Health 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 PepperLime Health will offset losses from the drop in PepperLime Health's long position.The idea behind Merck Company and PepperLime Health Acquisition 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.| PepperLime Health vs. Hudson Acquisition I | PepperLime Health vs. Alpha One | PepperLime Health vs. Manaris Corp | PepperLime Health vs. Marblegate Acquisition 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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