Correlation Between Mesa Air and Orchestra BioMed

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

By analyzing existing cross correlation between Mesa Air Group and Orchestra BioMed Holdings, you can compare the effects of market volatilities on Mesa Air and Orchestra BioMed 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 Mesa Air with a short position of Orchestra BioMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Orchestra BioMed.

Diversification Opportunities for Mesa Air and Orchestra BioMed

-0.63

Correlation Coefficient

Mesa Air  Orchestra BioMed

Excellent diversification

The 3 months correlation between Mesa and Orchestra is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings and Mesa Air 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 Mesa Air Group are associated (or correlated) with Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Mesa Air i.e., Mesa Air and Orchestra BioMed go up and down completely randomly.

Pair Corralation between Mesa Air and Orchestra BioMed

Given the investment horizon of 90 days Mesa Air Group is expected to under-perform the Orchestra BioMed. But the stock apears to be less risky and, when comparing its historical volatility, Mesa Air Group is 1.26 times less risky than Orchestra BioMed. The stock trades about -0.04 of its potential returns per unit of risk. The Orchestra BioMed Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  582.00  in Orchestra BioMed Holdings on September 13, 2024 and sell it today you would lose (64.50) from holding Orchestra BioMed Holdings or give up 11.08% of portfolio value over 90 days.

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

Mesa Air Group  vs.  Orchestra BioMed Holdings

Mesa Air Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mesa Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Orchestra BioMed Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orchestra BioMed Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Orchestra BioMed is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mesa Air and Orchestra BioMed

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

The idea behind Mesa Air Group and Orchestra BioMed Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.