Correlation Between PARKEN Sport and Merit Medical

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

By analyzing existing cross correlation between PARKEN Sport Entertainment and Merit Medical Systems, you can compare the effects of market volatilities on PARKEN Sport and Merit Medical 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 PARKEN Sport with a short position of Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and Merit Medical.

Diversification Opportunities for PARKEN Sport and Merit Medical

0.41

Correlation Coefficient

PARKEN Sport  Merit Medical

Very weak diversification

The 3 months correlation between PARKEN and Merit is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and PARKEN Sport 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 PARKEN Sport Entertainment are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and Merit Medical go up and down completely randomly.

Pair Corralation between PARKEN Sport and Merit Medical

Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 1.61 times more return on investment than Merit Medical. However, PARKEN Sport is 1.61 times more volatile than Merit Medical Systems. It trades about 0.08 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.06 per unit of risk. If you would invest  1,515  in PARKEN Sport Entertainment on September 30, 2024 and sell it today you would earn a total of  170.00  from holding PARKEN Sport Entertainment or generate 11.22% return on investment over 90 days.

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

PARKEN Sport Entertainment  vs.  Merit Medical Systems

PARKEN Sport Enterta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARKEN Sport reported solid returns over the last few months and may actually be approaching a breakup point.

Merit Medical Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Merit Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PARKEN Sport and Merit Medical

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

The idea behind PARKEN Sport Entertainment and Merit Medical Systems 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.