Correlation Between Pliant Therapeutics and Mersana Therapeutics

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

Diversification Opportunities for Pliant Therapeutics and Mersana Therapeutics

PliantMersanaDiversified AwayPliantMersanaDiversified Away100%
0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pliant and Mersana is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pliant Therapeutics and Mersana Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersana Therapeutics and Pliant 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 Pliant Therapeutics are associated (or correlated) with Mersana Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersana Therapeutics has no effect on the direction of Pliant Therapeutics i.e., Pliant Therapeutics and Mersana Therapeutics go up and down completely randomly.

Pair Corralation between Pliant Therapeutics and Mersana Therapeutics

Given the investment horizon of 90 days Pliant Therapeutics is expected to under-perform the Mersana Therapeutics. In addition to that, Pliant Therapeutics is 2.39 times more volatile than Mersana Therapeutics. It trades about -0.21 of its total potential returns per unit of risk. Mersana Therapeutics is currently generating about -0.08 per unit of volatility. If you would invest  59.00  in Mersana Therapeutics on November 30, 2024 and sell it today you would lose (9.00) from holding Mersana Therapeutics or give up 15.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Pliant Therapeutics  vs.  Mersana Therapeutics

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -80-60-40-20020
JavaScript chart by amCharts 3.21.15PLRX MRSN
       Timeline  
Pliant Therapeutics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Pliant 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 fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb46810121416
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

Pliant Therapeutics and Mersana Therapeutics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-16.91-12.67-8.42-4.18-0.07083.597.311.0214.7318.45 0.00400.00420.00440.00460.00480.00500.0052
JavaScript chart by amCharts 3.21.15PLRX MRSN
       Returns  

Pair Trading with Pliant Therapeutics and Mersana Therapeutics

The main advantage of trading using opposite Pliant Therapeutics and Mersana Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pliant Therapeutics position performs unexpectedly, Mersana 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 Mersana Therapeutics will offset losses from the drop in Mersana Therapeutics' long position.
The idea behind Pliant Therapeutics and Mersana 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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