Correlation Between Mereo BioPharma and Keros Therapeutics
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma and Keros Therapeutics 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 Keros Therapeutics 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 Keros Therapeutics, you can compare the effects of market volatilities on Mereo BioPharma and Keros Therapeutics 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 Keros Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and Keros Therapeutics.
Diversification Opportunities for Mereo BioPharma and Keros Therapeutics
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mereo and Keros is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group and Keros Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keros Therapeutics 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 Keros Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keros Therapeutics has no effect on the direction of Mereo BioPharma i.e., Mereo BioPharma and Keros Therapeutics go up and down completely randomly.
Pair Corralation between Mereo BioPharma and Keros Therapeutics
Given the investment horizon of 90 days Mereo BioPharma Group is expected to under-perform the Keros Therapeutics. In addition to that, Mereo BioPharma is 1.23 times more volatile than Keros Therapeutics. It trades about -0.24 of its total potential returns per unit of risk. Keros Therapeutics is currently generating about -0.09 per unit of volatility. If you would invest 6,073 in Keros Therapeutics on August 27, 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 |
Mereo BioPharma Group vs. Keros Therapeutics
Performance |
| Timeline |
| Mereo BioPharma Group |
| Keros Therapeutics |
Mereo BioPharma and Keros Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mereo BioPharma and Keros Therapeutics
The main advantage of trading using opposite Mereo BioPharma and Keros Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma position performs unexpectedly, Keros Therapeutics 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 Keros Therapeutics will offset losses from the drop in Keros Therapeutics' long position.| Mereo BioPharma vs. Terns Pharmaceuticals | Mereo BioPharma vs. PDS Biotechnology Corp | Mereo BioPharma vs. Inozyme Pharma | Mereo BioPharma vs. Hookipa Pharma |
| Keros Therapeutics vs. Ideaya Biosciences | Keros Therapeutics vs. AnaptysBio | Keros Therapeutics vs. MeiraGTx Holdings PLC | Keros Therapeutics vs. Janux 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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