Correlation Between Procaps Group and Merck
Can any of the company-specific risk be diversified away by investing in both Procaps Group and Merck 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 Procaps Group and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procaps Group SA and Merck Company, you can compare the effects of market volatilities on Procaps Group and Merck 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 Procaps Group with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procaps Group and Merck.
Diversification Opportunities for Procaps Group and Merck
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Procaps and Merck is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Procaps Group SA and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Procaps Group 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 Procaps Group SA are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Procaps Group i.e., Procaps Group and Merck go up and down completely randomly.
Pair Corralation between Procaps Group and Merck
Given the investment horizon of 90 days Procaps Group SA is expected to generate 15.48 times more return on investment than Merck. However, Procaps Group is 15.48 times more volatile than Merck Company. It trades about 0.07 of its potential returns per unit of risk. Merck Company is currently generating about -0.08 per unit of risk. If you would invest 189.00 in Procaps Group SA on October 26, 2024 and sell it today you would lose (23.00) from holding Procaps Group SA or give up 12.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procaps Group SA vs. Merck Company
Performance |
| Timeline |
| Procaps Group SA |
| Merck Company |
Procaps Group and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procaps Group and Merck
The main advantage of trading using opposite Procaps Group and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procaps Group position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.| Procaps Group vs. Phibro Animal Health | Procaps Group vs. Delta 9 Cannabis | Procaps Group vs. City View Green | Procaps Group vs. Benchmark Botanics |
| Merck vs. Collegium Pharmaceutical | Merck vs. Phibro Animal Health | Merck vs. ANI Pharmaceuticals | Merck vs. Procaps Group SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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