Correlation Between Merck and Imunon

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

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

Diversification Opportunities for Merck and Imunon

0.54

Correlation Coefficient

Merck  Imunon

Very weak diversification

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

Pair Corralation between Merck and Imunon

Considering the 90-day investment horizon Merck is expected to generate 147.29 times less return on investment than Imunon. But when comparing it to its historical volatility, Merck Company is 8.05 times less risky than Imunon. It trades about 0.0 of its potential returns per unit of risk. Imunon Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Imunon Inc on October 26, 2024 and sell it today you would lose (67.23) from holding Imunon Inc or give up 41.25% of portfolio value over 90 days.

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

Merck Company  vs.  Imunon Inc

Merck Company

Risk-Adjusted Performance

0 of 100

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 conflicting 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.

Imunon Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Imunon Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Imunon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Merck and Imunon

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

The idea behind Merck Company and Imunon Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.