Correlation Between Mereo BioPharma and Aurinia Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma and Aurinia Pharmaceuticals 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 Mereo BioPharma and Aurinia Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mereo BioPharma Group and Aurinia Pharmaceuticals, you can compare the effects of market volatilities on Mereo BioPharma and Aurinia Pharmaceuticals 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 Mereo BioPharma with a short position of Aurinia Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and Aurinia Pharmaceuticals.
Diversification Opportunities for Mereo BioPharma and Aurinia Pharmaceuticals
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mereo and Aurinia is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group and Aurinia Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurinia Pharmaceuticals and Mereo BioPharma 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 Mereo BioPharma Group are associated (or correlated) with Aurinia Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurinia Pharmaceuticals has no effect on the direction of Mereo BioPharma i.e., Mereo BioPharma and Aurinia Pharmaceuticals go up and down completely randomly.
Pair Corralation between Mereo BioPharma and Aurinia Pharmaceuticals
Given the investment horizon of 90 days Mereo BioPharma is expected to generate 4.34 times less return on investment than Aurinia Pharmaceuticals. In addition to that, Mereo BioPharma is 1.29 times more volatile than Aurinia Pharmaceuticals. It trades about 0.03 of its total potential returns per unit of risk. Aurinia Pharmaceuticals is currently generating about 0.16 per unit of volatility. If you would invest 536.00 in Aurinia Pharmaceuticals on September 1, 2024 and sell it today you would earn a total of 350.00 from holding Aurinia Pharmaceuticals or generate 65.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Mereo BioPharma Group vs. Aurinia Pharmaceuticals
Performance |
| Timeline |
| Mereo BioPharma Group |
| Aurinia Pharmaceuticals |
Mereo BioPharma and Aurinia Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mereo BioPharma and Aurinia Pharmaceuticals
The main advantage of trading using opposite Mereo BioPharma and Aurinia Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma position performs unexpectedly, Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals will offset losses from the drop in Aurinia Pharmaceuticals' long position.| Mereo BioPharma vs. Terns Pharmaceuticals | Mereo BioPharma vs. PDS Biotechnology Corp | Mereo BioPharma vs. Inozyme Pharma | Mereo BioPharma vs. Hookipa Pharma |
| Aurinia Pharmaceuticals vs. Viking Therapeutics | Aurinia Pharmaceuticals vs. Axsome Therapeutics | Aurinia Pharmaceuticals vs. Madrigal Pharmaceuticals | Aurinia Pharmaceuticals vs. Seres Therapeutics |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |