Correlation Between Mereo BioPharma and International Business
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma and International Business 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 Mereo BioPharma and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mereo BioPharma Group and International Business Machines, you can compare the effects of market volatilities on Mereo BioPharma and International Business 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 Mereo BioPharma with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and International Business.
Diversification Opportunities for Mereo BioPharma and International Business
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mereo and International is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Mereo BioPharma 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 Mereo BioPharma Group are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Mereo BioPharma i.e., Mereo BioPharma and International Business go up and down completely randomly.
Pair Corralation between Mereo BioPharma and International Business
Assuming the 90 days trading horizon Mereo BioPharma Group is expected to generate 2.57 times more return on investment than International Business. However, Mereo BioPharma is 2.57 times more volatile than International Business Machines. It trades about 0.08 of its potential returns per unit of risk. International Business Machines is currently generating about 0.02 per unit of risk. If you would invest 88.00 in Mereo BioPharma Group on August 26, 2024 and sell it today you would earn a total of 284.00 from holding Mereo BioPharma Group or generate 322.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.71% |
| Values | Daily Returns |
Mereo BioPharma Group vs. International Business Machine
Performance |
| Timeline |
| Mereo BioPharma Group |
| International Business |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mereo BioPharma and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mereo BioPharma and International Business
The main advantage of trading using opposite Mereo BioPharma and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Mereo BioPharma vs. Samsung Electronics Co | Mereo BioPharma vs. Samsung Electronics Co | Mereo BioPharma vs. Hyundai Motor | Mereo BioPharma vs. Toyota Motor Corp |
| International Business vs. Westlake Chemical Corp | International Business vs. Charter Communications Cl | International Business vs. Global Net Lease | International Business vs. Capital Drilling |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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