Correlation Between Crinetics Pharmaceuticals and Mirum Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Crinetics Pharmaceuticals and Mirum Pharmaceuticals 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 Crinetics Pharmaceuticals and Mirum Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crinetics Pharmaceuticals and Mirum Pharmaceuticals, you can compare the effects of market volatilities on Crinetics Pharmaceuticals and Mirum Pharmaceuticals 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 Crinetics Pharmaceuticals with a short position of Mirum Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crinetics Pharmaceuticals and Mirum Pharmaceuticals.

Diversification Opportunities for Crinetics Pharmaceuticals and Mirum Pharmaceuticals

0.41

Correlation Coefficient

Crinetics Pharmaceuticals  Mirum Pharmaceuticals

Very weak diversification

The 3 months correlation between Crinetics and Mirum is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Crinetics Pharmaceuticals and Mirum Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirum Pharmaceuticals and Crinetics Pharmaceuticals 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 Crinetics Pharmaceuticals are associated (or correlated) with Mirum Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirum Pharmaceuticals has no effect on the direction of Crinetics Pharmaceuticals i.e., Crinetics Pharmaceuticals and Mirum Pharmaceuticals go up and down completely randomly.

Pair Corralation between Crinetics Pharmaceuticals and Mirum Pharmaceuticals

Given the investment horizon of 90 days Crinetics Pharmaceuticals is expected to generate 1.56 times more return on investment than Mirum Pharmaceuticals. However, Crinetics Pharmaceuticals is 1.56 times more volatile than Mirum Pharmaceuticals. It trades about -0.07 of its potential returns per unit of risk. Mirum Pharmaceuticals is currently generating about -0.17 per unit of risk. If you would invest  5,677  in Crinetics Pharmaceuticals on September 27, 2024 and sell it today you would lose (285.00) from holding Crinetics Pharmaceuticals or give up 5.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Crinetics Pharmaceuticals  vs.  Mirum Pharmaceuticals

Crinetics Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crinetics Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Crinetics Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mirum Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mirum Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Mirum Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Crinetics Pharmaceuticals and Mirum Pharmaceuticals

The main advantage of trading using opposite Crinetics Pharmaceuticals and Mirum Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crinetics Pharmaceuticals position performs unexpectedly, Mirum Pharmaceuticals 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 Mirum Pharmaceuticals will offset losses from the drop in Mirum Pharmaceuticals' long position.

The idea behind Crinetics Pharmaceuticals and Mirum Pharmaceuticals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.