Correlation Between Biomea Fusion and Eliem Therapeutics
Can any of the company-specific risk be diversified away by investing in both Biomea Fusion and Eliem 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 Biomea Fusion and Eliem Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biomea Fusion and Eliem Therapeutics, you can compare the effects of market volatilities on Biomea Fusion and Eliem 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 Biomea Fusion with a short position of Eliem Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biomea Fusion and Eliem Therapeutics.
Diversification Opportunities for Biomea Fusion and Eliem Therapeutics
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Biomea and Eliem is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Biomea Fusion and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics and Biomea Fusion 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 Biomea Fusion are associated (or correlated) with Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Biomea Fusion i.e., Biomea Fusion and Eliem Therapeutics go up and down completely randomly.
Pair Corralation between Biomea Fusion and Eliem Therapeutics
Given the investment horizon of 90 days Biomea Fusion is expected to under-perform the Eliem Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Biomea Fusion is 1.0 times less risky than Eliem Therapeutics. The stock trades about -0.51 of its potential returns per unit of risk. The Eliem Therapeutics is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest 411.00 in Eliem Therapeutics on August 28, 2024 and sell it today you would lose (111.00) from holding Eliem Therapeutics or give up 27.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Biomea Fusion vs. Eliem Therapeutics
Performance |
| Timeline |
| Biomea Fusion |
| Eliem Therapeutics |
Biomea Fusion and Eliem Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biomea Fusion and Eliem Therapeutics
The main advantage of trading using opposite Biomea Fusion and Eliem Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biomea Fusion position performs unexpectedly, Eliem 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 Eliem Therapeutics will offset losses from the drop in Eliem Therapeutics' long position.| Biomea Fusion vs. Eliem Therapeutics | Biomea Fusion vs. HCW Biologics | Biomea Fusion vs. Scpharmaceuticals | Biomea Fusion vs. Milestone Pharmaceuticals |
| Eliem Therapeutics vs. Pmv Pharmaceuticals | Eliem Therapeutics vs. MediciNova | Eliem Therapeutics vs. Pharvaris BV | Eliem Therapeutics vs. PepGen |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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