Correlation Between Keros Therapeutics and Merus BV
Can any of the company-specific risk be diversified away by investing in both Keros Therapeutics and Merus BV 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 Merus BV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keros Therapeutics and Merus BV, you can compare the effects of market volatilities on Keros Therapeutics and Merus BV 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 Merus BV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keros Therapeutics and Merus BV.
Diversification Opportunities for Keros Therapeutics and Merus BV
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Keros and Merus is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Keros Therapeutics and Merus BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merus BV 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 Merus BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merus BV has no effect on the direction of Keros Therapeutics i.e., Keros Therapeutics and Merus BV go up and down completely randomly.
Pair Corralation between Keros Therapeutics and Merus BV
Given the investment horizon of 90 days Keros Therapeutics is expected to under-perform the Merus BV. But the stock apears to be less risky and, when comparing its historical volatility, Keros Therapeutics is 1.23 times less risky than Merus BV. The stock trades about -0.02 of its potential returns per unit of risk. The Merus BV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,848 in Merus BV on August 27, 2024 and sell it today you would lose (299.00) from holding Merus BV or give up 6.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keros Therapeutics vs. Merus BV
Performance |
| Timeline |
| Keros Therapeutics |
| Merus BV |
Keros Therapeutics and Merus BV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keros Therapeutics and Merus BV
The main advantage of trading using opposite Keros Therapeutics and Merus BV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keros Therapeutics position performs unexpectedly, Merus BV 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 Merus BV will offset losses from the drop in Merus BV's long position.| Keros Therapeutics vs. Ideaya Biosciences | Keros Therapeutics vs. AnaptysBio | Keros Therapeutics vs. MeiraGTx Holdings PLC | Keros Therapeutics vs. Janux Therapeutics |
| Merus BV vs. Anebulo Pharmaceuticals | Merus BV vs. Adagene | Merus BV vs. Acrivon Therapeutics, Common | Merus BV vs. AnaptysBio |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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