diversifiable risk of combining Merck and Aditxt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Aditxt Inc, you can compare the effects of market volatilities on Merck and Aditxt 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 Aditxt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Aditxt.
Diversification Opportunities for Merck and Aditxt
Pair Corralation between Merck and Aditxt
Considering the 90-day investment horizon Merck is expected to generate 7.89 times less return on investment than Aditxt. But when comparing it to its historical volatility, Merck Company is 23.79 times less risky than Aditxt. It trades about 0.04 of its potential returns per unit of risk. Aditxt Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,160 in Aditxt Inc on December 5, 2023 and sell it today you would lose (4,811) from holding Aditxt Inc or give up 93.24% of portfolio value over 90 days.
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Merck Company vs. Aditxt Inc
Pair Trading with Merck and AditxtThe main advantage of trading using opposite Merck and Aditxt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck position performs unexpectedly, Aditxt 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 Aditxt will offset losses from the drop in Aditxt's long position. The idea behind Merck Company and Aditxt 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.
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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