Correlation Between Merck and Bm Technologies

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

By analyzing existing cross correlation between Merck Company and Bm Technologies, you can compare the effects of market volatilities on Merck and Bm Technologies 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 Bm Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Bm Technologies.

Diversification Opportunities for Merck and Bm Technologies

-0.38

Correlation Coefficient

Merck  Bm Technologies

Very good diversification

The 3 months correlation between Merck and BMTX is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Bm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bm Technologies 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 Bm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bm Technologies has no effect on the direction of Merck i.e., Merck and Bm Technologies go up and down completely randomly.

Pair Corralation between Merck and Bm Technologies

Considering the 90-day investment horizon Merck Company is expected to under-perform the Bm Technologies. In addition to that, Merck is 4.66 times more volatile than Bm Technologies. It trades about -0.05 of its total potential returns per unit of risk. Bm Technologies is currently generating about 0.33 per unit of volatility. If you would invest  484.00  in Bm Technologies on December 22, 2024 and sell it today you would earn a total of  16.00  from holding Bm Technologies or generate 3.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

Merck Company  vs.  Bm Technologies

Merck Company

Risk-Adjusted Performance

Very Weak

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

Bm Technologies

Risk-Adjusted Performance

Solid

Over the last 90 days Bm Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Bm Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Merck and Bm Technologies

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

The idea behind Merck Company and Bm Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.