Correlation Between Merck and Satsuma Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Merck and Satsuma Pharmaceuticals 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 Satsuma Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Satsuma Pharmaceuticals, you can compare the effects of market volatilities on Merck and Satsuma Pharmaceuticals 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 Satsuma Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Satsuma Pharmaceuticals.
Diversification Opportunities for Merck and Satsuma Pharmaceuticals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Merck and Satsuma is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Satsuma Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satsuma Pharmaceuticals 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 Satsuma Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satsuma Pharmaceuticals has no effect on the direction of Merck i.e., Merck and Satsuma Pharmaceuticals go up and down completely randomly.
Pair Corralation between Merck and Satsuma Pharmaceuticals
If you would invest (100.00) in Satsuma Pharmaceuticals on November 27, 2024 and sell it today you would earn a total of 100.00 from holding Satsuma Pharmaceuticals or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Merck Company vs. Satsuma Pharmaceuticals
Performance |
| Timeline |
| Merck Company |
| Satsuma Pharmaceuticals |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Merck and Satsuma Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Satsuma Pharmaceuticals
The main advantage of trading using opposite Merck and Satsuma Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Satsuma Pharmaceuticals 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 Satsuma Pharmaceuticals will offset losses from the drop in Satsuma Pharmaceuticals' long position.The idea behind Merck Company and Satsuma Pharmaceuticals 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.| Satsuma Pharmaceuticals vs. Erasca Inc | Satsuma Pharmaceuticals vs. Forte Biosciences | Satsuma Pharmaceuticals vs. SAB Biotherapeutics | Satsuma Pharmaceuticals vs. Senti Biosciences |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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 | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |