Correlation Between Merck and Edoc Acquisition
Can any of the company-specific risk be diversified away by investing in both Merck and Edoc Acquisition 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 Edoc Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Edoc Acquisition Corp, you can compare the effects of market volatilities on Merck and Edoc Acquisition 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 Edoc Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Edoc Acquisition.
Diversification Opportunities for Merck and Edoc Acquisition
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merck and Edoc is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Edoc Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edoc Acquisition Corp 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 Edoc Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edoc Acquisition Corp has no effect on the direction of Merck i.e., Merck and Edoc Acquisition go up and down completely randomly.
Pair Corralation between Merck and Edoc Acquisition
Considering the 90-day investment horizon Merck Company is expected to under-perform the Edoc Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 17.42 times less risky than Edoc Acquisition. The stock trades about 0.0 of its potential returns per unit of risk. The Edoc Acquisition Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Edoc Acquisition Corp on October 11, 2024 and sell it today you would earn a total of 3.00 from holding Edoc Acquisition Corp or generate 30.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 17.74% |
Values | Daily Returns |
Merck Company vs. Edoc Acquisition Corp
Performance |
Timeline |
Merck Company |
Edoc Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Merck and Edoc Acquisition Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and Edoc Acquisition
The main advantage of trading using opposite Merck and Edoc Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Edoc Acquisition 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 Edoc Acquisition will offset losses from the drop in Edoc Acquisition's long position.Merck vs. Emergent Biosolutions | Merck vs. Bausch Health Companies | Merck vs. Neurocrine Biosciences | Merck vs. Teva Pharma Industries |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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