Correlation Between Merck and Orgenesis

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

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

Diversification Opportunities for Merck and Orgenesis

-0.61

Correlation Coefficient

Merck  Orgenesis

Excellent diversification

The 3 months correlation between Merck and Orgenesis is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Orgenesis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orgenesis 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 Orgenesis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orgenesis has no effect on the direction of Merck i.e., Merck and Orgenesis go up and down completely randomly.

Pair Corralation between Merck and Orgenesis

Considering the 90-day investment horizon Merck is expected to generate 2.46 times less return on investment than Orgenesis. But when comparing it to its historical volatility, Merck Company is 4.23 times less risky than Orgenesis. It trades about 0.04 of its potential returns per unit of risk. Orgenesis is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Orgenesis on March 9, 2024 and sell it today you would earn a total of  0.00  from holding Orgenesis or generate 0.0% return on investment over 90 days.

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

Merck Company  vs.  Orgenesis

Merck Company

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Merck may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Orgenesis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orgenesis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Merck and Orgenesis

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

The idea behind Merck Company and Orgenesis 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.