Correlation Between Merck and Structure Therapeutics

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

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

Diversification Opportunities for Merck and Structure Therapeutics

-0.65

Correlation Coefficient

Merck  Structure Therapeutics

Excellent diversification

The 3 months correlation between Merck and Structure is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Structure Therapeutics America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Structure Therapeutics 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 Structure Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Structure Therapeutics has no effect on the direction of Merck i.e., Merck and Structure Therapeutics go up and down completely randomly.

Pair Corralation between Merck and Structure Therapeutics

Considering the 90-day investment horizon Merck Company is expected to generate 0.72 times more return on investment than Structure Therapeutics. However, Merck Company is 1.38 times less risky than Structure Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Structure Therapeutics American is currently generating about -0.29 per unit of risk. If you would invest  7,688  in Merck Company on May 8, 2025 and sell it today you would earn a total of  256.00  from holding Merck Company or generate 3.33% 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.  Structure Therapeutics America

Merck Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 2 (%) 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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Structure Therapeutics

Risk-Adjusted Performance

Weakest

Over the last 90 days Structure Therapeutics American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Merck and Structure Therapeutics

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

The idea behind Merck Company and Structure Therapeutics American 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.