Correlation Between Merck and Aditxt

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Can any of the company-specific risk be diversified away by investing in both Merck and Aditxt 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 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

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between Merck and Aditxt is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Aditxt Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aditxt 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 Aditxt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aditxt Inc has no effect on the direction of Merck i.e., Merck and Aditxt go up and down completely randomly.

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.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Merck Company  vs.  Aditxt Inc

 Performance 
       Timeline  
Merck Company 

Risk-Adjusted Performance

23 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Merck disclosed solid returns over the last few months and may actually be approaching a breakup point.
Aditxt Inc 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Aditxt Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aditxt showed solid returns over the last few months and may actually be approaching a breakup point.

Merck and Aditxt Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Merck and Aditxt

The 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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