Correlation Between Merck and Cellectis

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

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

Diversification Opportunities for Merck and Cellectis

0.36

Correlation Coefficient

Merck  Cellectis

Weak diversification

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

Pair Corralation between Merck and Cellectis

Considering the 90-day investment horizon Merck Company is expected to generate 0.37 times more return on investment than Cellectis. However, Merck Company is 2.69 times less risky than Cellectis. It trades about -0.07 of its potential returns per unit of risk. Cellectis SA is currently generating about -0.1 per unit of risk. If you would invest  9,753  in Merck Company on December 29, 2024 and sell it today you would lose (830.00) from holding Merck Company or give up 8.51% of portfolio value over 90 days.

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

Merck Company  vs.  Cellectis SA

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 latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cellectis SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Merck and Cellectis

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

The idea behind Merck Company and Cellectis SA 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.