Correlation Between Mersana Therapeutics and Keros Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Mersana Therapeutics 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 Mersana Therapeutics and Keros Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mersana Therapeutics and Keros Therapeutics, you can compare the effects of market volatilities on Mersana Therapeutics 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 Mersana Therapeutics with a short position of Keros Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mersana Therapeutics and Keros Therapeutics.

Diversification Opportunities for Mersana Therapeutics and Keros Therapeutics

MersanaKerosDiversified AwayMersanaKerosDiversified Away100%
0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Mersana and Keros is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Mersana Therapeutics and Keros Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keros Therapeutics and Mersana 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 Mersana Therapeutics 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 Mersana Therapeutics i.e., Mersana Therapeutics and Keros Therapeutics go up and down completely randomly.

Pair Corralation between Mersana Therapeutics and Keros Therapeutics

Given the investment horizon of 90 days Mersana Therapeutics is expected to under-perform the Keros Therapeutics. In addition to that, Mersana Therapeutics is 2.91 times more volatile than Keros Therapeutics. It trades about -0.08 of its total potential returns per unit of risk. Keros Therapeutics is currently generating about -0.06 per unit of volatility. If you would invest  1,137  in Keros Therapeutics on November 30, 2024 and sell it today you would lose (43.00) from holding Keros Therapeutics or give up 3.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Mersana Therapeutics  vs.  Keros Therapeutics

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -80-60-40-2002040
JavaScript chart by amCharts 3.21.15MRSN KROS
       Timeline  
Mersana Therapeutics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Mersana Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.511.522.53
Keros Therapeutics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Keros Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10203040506070

Mersana Therapeutics and Keros Therapeutics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-15.64-11.72-7.79-3.860.03.216.439.6412.86 0.00420.00440.00460.00480.0050
JavaScript chart by amCharts 3.21.15MRSN KROS
       Returns  

Pair Trading with Mersana Therapeutics and Keros Therapeutics

The main advantage of trading using opposite Mersana Therapeutics and Keros Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mersana Therapeutics 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.
The idea behind Mersana Therapeutics and Keros Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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