Correlation Between Mereo BioPharma and Eiger Biopharmaceutica
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma and Eiger Biopharmaceutica 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 Eiger Biopharmaceutica 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 Eiger Biopharmaceuticals, you can compare the effects of market volatilities on Mereo BioPharma and Eiger Biopharmaceutica 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 Eiger Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and Eiger Biopharmaceutica.
Diversification Opportunities for Mereo BioPharma and Eiger Biopharmaceutica
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mereo and Eiger is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group and Eiger Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiger Biopharmaceuticals 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 Eiger Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiger Biopharmaceuticals has no effect on the direction of Mereo BioPharma i.e., Mereo BioPharma and Eiger Biopharmaceutica go up and down completely randomly.
Pair Corralation between Mereo BioPharma and Eiger Biopharmaceutica
Given the investment horizon of 90 days Mereo BioPharma Group is expected to generate 0.73 times more return on investment than Eiger Biopharmaceutica. However, Mereo BioPharma Group is 1.37 times less risky than Eiger Biopharmaceutica. It trades about 0.08 of its potential returns per unit of risk. Eiger Biopharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest 80.00 in Mereo BioPharma Group on August 29, 2024 and sell it today you would earn a total of 260.00 from holding Mereo BioPharma Group or generate 325.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.52% |
| Values | Daily Returns |
Mereo BioPharma Group vs. Eiger Biopharmaceuticals
Performance |
| Timeline |
| Mereo BioPharma Group |
| Eiger Biopharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mereo BioPharma and Eiger Biopharmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mereo BioPharma and Eiger Biopharmaceutica
The main advantage of trading using opposite Mereo BioPharma and Eiger Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma position performs unexpectedly, Eiger Biopharmaceutica 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 Eiger Biopharmaceutica will offset losses from the drop in Eiger Biopharmaceutica's long position.| Mereo BioPharma vs. Eliem Therapeutics | Mereo BioPharma vs. Scpharmaceuticals | Mereo BioPharma vs. Milestone Pharmaceuticals | Mereo BioPharma vs. Seres Therapeutics |
| Eiger Biopharmaceutica vs. Spero Therapeutics | Eiger Biopharmaceutica vs. Bolt Biotherapeutics | Eiger Biopharmaceutica vs. Coherus BioSciences | Eiger Biopharmaceutica vs. Cingulate |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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