Correlation Between Merrimack Pharmaceuticals and Genelux Common

Can any of the company-specific risk be diversified away by investing in both Merrimack Pharmaceuticals and Genelux Common 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 Merrimack Pharmaceuticals and Genelux Common into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Merrimack Pharmaceuticals and Genelux Common, you can compare the effects of market volatilities on Merrimack Pharmaceuticals and Genelux Common 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 Merrimack Pharmaceuticals with a short position of Genelux Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merrimack Pharmaceuticals and Genelux Common.

Diversification Opportunities for Merrimack Pharmaceuticals and Genelux Common

0.36

Correlation Coefficient

Merrimack Pharmaceuticals  Genelux Common

Weak diversification

The 3 months correlation between Merrimack and Genelux is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Merrimack Pharmaceuticals and Genelux Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genelux Common and Merrimack Pharmaceuticals 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 Merrimack Pharmaceuticals are associated (or correlated) with Genelux Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genelux Common has no effect on the direction of Merrimack Pharmaceuticals i.e., Merrimack Pharmaceuticals and Genelux Common go up and down completely randomly.

Pair Corralation between Merrimack Pharmaceuticals and Genelux Common

If you would invest  246.00  in Genelux Common on October 26, 2024 and sell it today you would earn a total of  90.00  from holding Genelux Common or generate 36.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

Merrimack Pharmaceuticals  vs.  Genelux Common

Merrimack Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merrimack Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Merrimack Pharmaceuticals is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Genelux Common

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genelux Common are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Genelux Common showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merrimack Pharmaceuticals and Genelux Common

The main advantage of trading using opposite Merrimack Pharmaceuticals and Genelux Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merrimack Pharmaceuticals position performs unexpectedly, Genelux Common 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 Genelux Common will offset losses from the drop in Genelux Common's long position.

The idea behind Merrimack Pharmaceuticals and Genelux Common 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.