Correlation Between Merit Medical and ATOSS SOFTWARE

Can any of the company-specific risk be diversified away by investing in both Merit Medical and ATOSS SOFTWARE 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 Merit Medical and ATOSS SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Merit Medical Systems and ATOSS SOFTWARE, you can compare the effects of market volatilities on Merit Medical and ATOSS SOFTWARE 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 Merit Medical with a short position of ATOSS SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and ATOSS SOFTWARE.

Diversification Opportunities for Merit Medical and ATOSS SOFTWARE

-0.54

Correlation Coefficient

Merit Medical  ATOSS SOFTWARE

Excellent diversification

The 3 months correlation between Merit and ATOSS is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and ATOSS SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATOSS SOFTWARE and Merit Medical 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 Merit Medical Systems are associated (or correlated) with ATOSS SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATOSS SOFTWARE has no effect on the direction of Merit Medical i.e., Merit Medical and ATOSS SOFTWARE go up and down completely randomly.

Pair Corralation between Merit Medical and ATOSS SOFTWARE

Assuming the 90 days trading horizon Merit Medical Systems is expected to generate 0.89 times more return on investment than ATOSS SOFTWARE. However, Merit Medical Systems is 1.12 times less risky than ATOSS SOFTWARE. It trades about 0.33 of its potential returns per unit of risk. ATOSS SOFTWARE is currently generating about -0.11 per unit of risk. If you would invest  9,250  in Merit Medical Systems on October 22, 2024 and sell it today you would earn a total of  650.00  from holding Merit Medical Systems or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Merit Medical Systems  vs.  ATOSS SOFTWARE

Merit Medical Systems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Merit Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

ATOSS SOFTWARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATOSS SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Merit Medical and ATOSS SOFTWARE

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

The idea behind Merit Medical Systems and ATOSS SOFTWARE 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.