Correlation Between Lexagene Holdings and Merit Medical

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

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

Diversification Opportunities for Lexagene Holdings and Merit Medical

-0.69

Correlation Coefficient

Lexagene Holdings  Merit Medical

Excellent diversification

The 3 months correlation between Lexagene and Merit is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lexagene Holdings and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems and Lexagene Holdings 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 Lexagene Holdings are associated (or correlated) with Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Lexagene Holdings i.e., Lexagene Holdings and Merit Medical go up and down completely randomly.

Pair Corralation between Lexagene Holdings and Merit Medical

Assuming the 90 days horizon Lexagene Holdings is expected to generate 5.49 times more return on investment than Merit Medical. However, Lexagene Holdings is 5.49 times more volatile than Merit Medical Systems. It trades about 0.03 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.06 per unit of risk. If you would invest  11.00  in Lexagene Holdings on March 28, 2024 and sell it today you would lose (2.94) from holding Lexagene Holdings or give up 26.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	41.13%
Values	Daily Returns

Lexagene Holdings  vs.  Merit Medical Systems

Lexagene Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lexagene Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Lexagene Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Merit Medical Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Merit Medical may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Lexagene Holdings and Merit Medical

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

The idea behind Lexagene Holdings and Merit Medical Systems 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.