Correlation Between Inozyme Pharma and Mersana Therapeutics
Can any of the company-specific risk be diversified away by investing in both Inozyme Pharma and Mersana 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 Inozyme Pharma and Mersana Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inozyme Pharma and Mersana Therapeutics, you can compare the effects of market volatilities on Inozyme Pharma and Mersana 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 Inozyme Pharma with a short position of Mersana Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inozyme Pharma and Mersana Therapeutics.
Diversification Opportunities for Inozyme Pharma and Mersana Therapeutics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inozyme and Mersana is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Inozyme Pharma and Mersana Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersana Therapeutics and Inozyme Pharma 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 Inozyme Pharma are associated (or correlated) with Mersana Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersana Therapeutics has no effect on the direction of Inozyme Pharma i.e., Inozyme Pharma and Mersana Therapeutics go up and down completely randomly.
Pair Corralation between Inozyme Pharma and Mersana Therapeutics
Given the investment horizon of 90 days Inozyme Pharma is expected to generate 0.75 times more return on investment than Mersana Therapeutics. However, Inozyme Pharma is 1.34 times less risky than Mersana Therapeutics. It trades about -0.4 of its potential returns per unit of risk. Mersana Therapeutics is currently generating about -0.4 per unit of risk. If you would invest 281.00 in Inozyme Pharma on October 20, 2024 and sell it today you would lose (145.00) from holding Inozyme Pharma or give up 51.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inozyme Pharma vs. Mersana Therapeutics
Performance |
| Timeline |
| Inozyme Pharma |
| Mersana Therapeutics |
Inozyme Pharma and Mersana Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inozyme Pharma and Mersana Therapeutics
The main advantage of trading using opposite Inozyme Pharma and Mersana Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inozyme Pharma position performs unexpectedly, Mersana 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 Mersana Therapeutics will offset losses from the drop in Mersana Therapeutics' long position.| Inozyme Pharma vs. Day One Biopharmaceuticals | Inozyme Pharma vs. X4 Pharmaceuticals | Inozyme Pharma vs. Acumen Pharmaceuticals | Inozyme Pharma vs. Mereo BioPharma Group |
| Mersana Therapeutics vs. Terns Pharmaceuticals | Mersana Therapeutics vs. Amylyx Pharmaceuticals | Mersana Therapeutics vs. Acumen Pharmaceuticals | Mersana Therapeutics vs. Inozyme Pharma |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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