Correlation Between Merck and Tevogen Bio

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

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

Diversification Opportunities for Merck and Tevogen Bio

-0.4

Correlation Coefficient

Merck  Tevogen Bio

Very good diversification

The 3 months correlation between Merck and Tevogen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Tevogen Bio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tevogen Bio Holdings 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 Tevogen Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tevogen Bio Holdings has no effect on the direction of Merck i.e., Merck and Tevogen Bio go up and down completely randomly.

Pair Corralation between Merck and Tevogen Bio

Considering the 90-day investment horizon Merck Company is expected to under-perform the Tevogen Bio. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 3.84 times less risky than Tevogen Bio. The stock trades about -0.07 of its potential returns per unit of risk. The Tevogen Bio Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  105.00  in Tevogen Bio Holdings on December 29, 2024 and sell it today you would earn a total of  15.00  from holding Tevogen Bio Holdings or generate 14.29% return on investment over 90 days.

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

Merck Company  vs.  Tevogen Bio Holdings

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.

Tevogen Bio Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tevogen Bio Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Tevogen Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merck and Tevogen Bio

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

The idea behind Merck Company and Tevogen Bio Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.