Correlation Between Merck and Intouch Insight

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

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

Diversification Opportunities for Merck and Intouch Insight

-0.48

Correlation Coefficient

Merck  Intouch Insight

Very good diversification

The 3 months correlation between Merck and Intouch is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Intouch Insight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intouch Insight 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 Intouch Insight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intouch Insight has no effect on the direction of Merck i.e., Merck and Intouch Insight go up and down completely randomly.

Pair Corralation between Merck and Intouch Insight

Considering the 90-day investment horizon Merck Company is expected to under-perform the Intouch Insight. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 3.03 times less risky than Intouch Insight. The stock trades about -0.03 of its potential returns per unit of risk. The Intouch Insight is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Intouch Insight on April 26, 2025 and sell it today you would lose (4.00) from holding Intouch Insight or give up 11.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

Merck Company  vs.  Intouch Insight

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Intouch Insight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intouch Insight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Merck and Intouch Insight

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

The idea behind Merck Company and Intouch Insight 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.