Correlation Between Merck and ProMIS Neurosciences
Can any of the company-specific risk be diversified away by investing in both Merck and ProMIS Neurosciences 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 ProMIS Neurosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and ProMIS Neurosciences, you can compare the effects of market volatilities on Merck and ProMIS Neurosciences 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 ProMIS Neurosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and ProMIS Neurosciences.
Diversification Opportunities for Merck and ProMIS Neurosciences
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merck and ProMIS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ProMIS Neurosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProMIS Neurosciences 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 ProMIS Neurosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProMIS Neurosciences has no effect on the direction of Merck i.e., Merck and ProMIS Neurosciences go up and down completely randomly.
Pair Corralation between Merck and ProMIS Neurosciences
Considering the 90-day investment horizon Merck Company is expected to generate 0.22 times more return on investment than ProMIS Neurosciences. However, Merck Company is 4.58 times less risky than ProMIS Neurosciences. It trades about -0.08 of its potential returns per unit of risk. ProMIS Neurosciences is currently generating about -0.08 per unit of risk. If you would invest 10,423 in Merck Company on August 29, 2024 and sell it today you would lose (261.00) from holding Merck Company or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. ProMIS Neurosciences
Performance |
| Timeline |
| Merck Company |
| ProMIS Neurosciences |
Merck and ProMIS Neurosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and ProMIS Neurosciences
The main advantage of trading using opposite Merck and ProMIS Neurosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, ProMIS Neurosciences 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 ProMIS Neurosciences will offset losses from the drop in ProMIS Neurosciences' long position.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| ProMIS Neurosciences vs. biOasis Technologies | ProMIS Neurosciences vs. Zenith Capital Corp | ProMIS Neurosciences vs. Hemogenyx Pharmaceuticals Plc | ProMIS Neurosciences vs. Fennec Pharmaceuticals |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |