Correlation Between Mereo BioPharma and CEL SCI
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma and CEL SCI 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 CEL SCI 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 CEL SCI Corp, you can compare the effects of market volatilities on Mereo BioPharma and CEL SCI 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 CEL SCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and CEL SCI.
Diversification Opportunities for Mereo BioPharma and CEL SCI
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mereo and CEL is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group and CEL SCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEL SCI Corp 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 CEL SCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEL SCI Corp has no effect on the direction of Mereo BioPharma i.e., Mereo BioPharma and CEL SCI go up and down completely randomly.
Pair Corralation between Mereo BioPharma and CEL SCI
Given the investment horizon of 90 days Mereo BioPharma Group is expected to generate 0.38 times more return on investment than CEL SCI. However, Mereo BioPharma Group is 2.61 times less risky than CEL SCI. It trades about -0.24 of its potential returns per unit of risk. CEL SCI Corp is currently generating about -0.11 per unit of risk. If you would invest 292.00 in Mereo BioPharma Group on November 28, 2024 and sell it today you would lose (40.00) from holding Mereo BioPharma Group or give up 13.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mereo BioPharma Group vs. CEL SCI Corp
Performance |
| Timeline |
| Mereo BioPharma Group |
| CEL SCI Corp |
Mereo BioPharma and CEL SCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mereo BioPharma and CEL SCI
The main advantage of trading using opposite Mereo BioPharma and CEL SCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma position performs unexpectedly, CEL SCI 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 CEL SCI will offset losses from the drop in CEL SCI's long position.| Mereo BioPharma vs. Terns Pharmaceuticals | Mereo BioPharma vs. PDS Biotechnology Corp | Mereo BioPharma vs. Inozyme Pharma | Mereo BioPharma vs. Hookipa Pharma |
| CEL SCI vs. Beam Therapeutics | CEL SCI vs. Editas Medicine | CEL SCI vs. Caribou Biosciences | CEL SCI vs. Verve 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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