Correlation Between Merck and Serina Therapeutics
Can any of the company-specific risk be diversified away by investing in both Merck and Serina Therapeutics 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 Serina Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Serina Therapeutics, you can compare the effects of market volatilities on Merck and Serina Therapeutics 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 Serina Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Serina Therapeutics.
Diversification Opportunities for Merck and Serina Therapeutics
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merck and Serina is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Serina Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serina Therapeutics 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 Serina Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serina Therapeutics has no effect on the direction of Merck i.e., Merck and Serina Therapeutics go up and down completely randomly.
Pair Corralation between Merck and Serina Therapeutics
Considering the 90-day investment horizon Merck Company is expected to generate 0.19 times more return on investment than Serina Therapeutics. However, Merck Company is 5.36 times less risky than Serina Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Serina Therapeutics is currently generating about -0.01 per unit of risk. If you would invest 10,093 in Merck Company on December 7, 2024 and sell it today you would lose (693.00) from holding Merck Company or give up 6.87% 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. Serina Therapeutics
Performance |
Timeline |
Merck Company |
Serina Therapeutics |
Merck and Serina Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merck and Serina Therapeutics
The main advantage of trading using opposite Merck and Serina Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Serina Therapeutics 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 Serina Therapeutics will offset losses from the drop in Serina Therapeutics' long position.The idea behind Merck Company and Serina Therapeutics 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.Serina Therapeutics vs. Alto Ingredients | Serina Therapeutics vs. Diageo PLC ADR | Serina Therapeutics vs. Avient Corp | Serina Therapeutics vs. Universal |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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