Correlation Between C4 Therapeutics and Merck

Can any of the company-specific risk be diversified away by investing in both C4 Therapeutics and Merck 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 C4 Therapeutics and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C4 Therapeutics and Merck Company, you can compare the effects of market volatilities on C4 Therapeutics and Merck 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 C4 Therapeutics with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of C4 Therapeutics and Merck.

Diversification Opportunities for C4 Therapeutics and Merck

0.37

Correlation Coefficient

C4 Therapeutics  Merck

Weak diversification

The 3 months correlation between CCCC and Merck is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding C4 Therapeutics and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and C4 Therapeutics 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 C4 Therapeutics are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of C4 Therapeutics i.e., C4 Therapeutics and Merck go up and down completely randomly.

Pair Corralation between C4 Therapeutics and Merck

Given the investment horizon of 90 days C4 Therapeutics is expected to generate 4.93 times more return on investment than Merck. However, C4 Therapeutics is 4.93 times more volatile than Merck Company. It trades about 0.12 of its potential returns per unit of risk. Merck Company is currently generating about 0.05 per unit of risk. If you would invest  148.00  in C4 Therapeutics on July 3, 2025 and sell it today you would earn a total of  74.00  from holding C4 Therapeutics or generate 50.0% return on investment over 90 days.

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

C4 Therapeutics  vs.  Merck Company

C4 Therapeutics

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in C4 Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, C4 Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Merck Company

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Merck is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with C4 Therapeutics and Merck

The main advantage of trading using opposite C4 Therapeutics and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C4 Therapeutics position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.

The idea behind C4 Therapeutics and Merck Company 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.