Correlation Between Merit Medical and Gol Intelligent

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

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

Diversification Opportunities for Merit Medical and Gol Intelligent

0.0

Correlation Coefficient

Merit Medical  Gol Intelligent

Pay attention - limited upside

The 3 months correlation between Merit and Gol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Gol Intelligent Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Intelligent Airlines and Merit Medical 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 Merit Medical Systems are associated (or correlated) with Gol Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Intelligent Airlines has no effect on the direction of Merit Medical i.e., Merit Medical and Gol Intelligent go up and down completely randomly.

Pair Corralation between Merit Medical and Gol Intelligent

If you would invest  8,550  in Merit Medical Systems on September 3, 2024 and sell it today you would earn a total of  1,200  from holding Merit Medical Systems or generate 14.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Merit Medical Systems  vs.  Gol Intelligent Airlines

Merit Medical Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Merit Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gol Intelligent Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gol Intelligent Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gol Intelligent 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 Merit Medical and Gol Intelligent

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

The idea behind Merit Medical Systems and Gol Intelligent Airlines 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.