Correlation Between Helical Bar and Mereo BioPharma
Can any of the company-specific risk be diversified away by investing in both Helical Bar and Mereo BioPharma 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 Helical Bar and Mereo BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Helical Bar Plc and Mereo BioPharma Group, you can compare the effects of market volatilities on Helical Bar and Mereo BioPharma 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 Helical Bar with a short position of Mereo BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Helical Bar and Mereo BioPharma.
Diversification Opportunities for Helical Bar and Mereo BioPharma
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Helical and Mereo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Helical Bar Plc and Mereo BioPharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mereo BioPharma Group and Helical Bar 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 Helical Bar Plc are associated (or correlated) with Mereo BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mereo BioPharma Group has no effect on the direction of Helical Bar i.e., Helical Bar and Mereo BioPharma go up and down completely randomly.
Pair Corralation between Helical Bar and Mereo BioPharma
Assuming the 90 days trading horizon Helical Bar Plc is expected to under-perform the Mereo BioPharma. But the stock apears to be less risky and, when comparing its historical volatility, Helical Bar Plc is 2.81 times less risky than Mereo BioPharma. The stock trades about -0.04 of its potential returns per unit of risk. The Mereo BioPharma Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Mereo BioPharma Group on September 3, 2024 and sell it today you would earn a total of 276.00 from holding Mereo BioPharma Group or generate 349.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.38% |
| Values | Daily Returns |
Helical Bar Plc vs. Mereo BioPharma Group
Performance |
| Timeline |
| Helical Bar Plc |
| Mereo BioPharma Group |
Helical Bar and Mereo BioPharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Helical Bar and Mereo BioPharma
The main advantage of trading using opposite Helical Bar and Mereo BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helical Bar position performs unexpectedly, Mereo BioPharma 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 Mereo BioPharma will offset losses from the drop in Mereo BioPharma's long position.| Helical Bar vs. Norman Broadbent Plc | Helical Bar vs. EVS Broadcast Equipment | Helical Bar vs. Applied Materials | Helical Bar vs. Host Hotels Resorts |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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