Correlation Between Keros Therapeutics and Mereo BioPharma
Can any of the company-specific risk be diversified away by investing in both Keros Therapeutics 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 Keros Therapeutics and Mereo BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keros Therapeutics and Mereo BioPharma Group, you can compare the effects of market volatilities on Keros Therapeutics 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 Keros Therapeutics with a short position of Mereo BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keros Therapeutics and Mereo BioPharma.
Diversification Opportunities for Keros Therapeutics and Mereo BioPharma
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Keros and Mereo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Keros Therapeutics 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 Keros Therapeutics 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 Keros Therapeutics 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 Keros Therapeutics i.e., Keros Therapeutics and Mereo BioPharma go up and down completely randomly.
Pair Corralation between Keros Therapeutics and Mereo BioPharma
Given the investment horizon of 90 days Keros Therapeutics is expected to generate 0.81 times more return on investment than Mereo BioPharma. However, Keros Therapeutics is 1.23 times less risky than Mereo BioPharma. It trades about -0.09 of its potential returns per unit of risk. Mereo BioPharma Group is currently generating about -0.24 per unit of risk. If you would invest 6,073 in Keros Therapeutics on August 28, 2024 and sell it today you would lose (415.00) from holding Keros Therapeutics or give up 6.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keros Therapeutics vs. Mereo BioPharma Group
Performance |
| Timeline |
| Keros Therapeutics |
| Mereo BioPharma Group |
Keros Therapeutics and Mereo BioPharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keros Therapeutics and Mereo BioPharma
The main advantage of trading using opposite Keros Therapeutics and Mereo BioPharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keros Therapeutics 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.| Keros Therapeutics vs. Ideaya Biosciences | Keros Therapeutics vs. AnaptysBio | Keros Therapeutics vs. MeiraGTx Holdings PLC | Keros Therapeutics vs. Janux Therapeutics |
| Mereo BioPharma vs. Terns Pharmaceuticals | Mereo BioPharma vs. PDS Biotechnology Corp | Mereo BioPharma vs. Inozyme Pharma | Mereo BioPharma vs. Hookipa 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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