Correlation Between Merck and Sadot

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

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

Diversification Opportunities for Merck and Sadot

0.03

Correlation Coefficient

Merck  Sadot

Significant diversification

The 3 months correlation between Merck and Sadot is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Sadot Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sadot Group 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 Sadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sadot Group has no effect on the direction of Merck i.e., Merck and Sadot go up and down completely randomly.

Pair Corralation between Merck and Sadot

Considering the 90-day investment horizon Merck Company is expected to generate 0.19 times more return on investment than Sadot. However, Merck Company is 5.34 times less risky than Sadot. It trades about 0.1 of its potential returns per unit of risk. Sadot Group is currently generating about -0.04 per unit of risk. If you would invest  7,406  in Merck Company on May 15, 2025 and sell it today you would earn a total of  624.00  from holding Merck Company or generate 8.43% return on investment over 90 days.

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

Merck Company  vs.  Sadot Group

Merck Company

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Merck may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Sadot Group

Risk-Adjusted Performance

Weakest

Over the last 90 days Sadot Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Merck and Sadot

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

The idea behind Merck Company and Sadot Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.