Correlation Between Mereo BioPharma and Amicus Therapeutics
Can any of the company-specific risk be diversified away by investing in both Mereo BioPharma and Amicus 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 Amicus 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 Amicus Therapeutics, you can compare the effects of market volatilities on Mereo BioPharma and Amicus 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 Amicus Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mereo BioPharma and Amicus Therapeutics.
Diversification Opportunities for Mereo BioPharma and Amicus Therapeutics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mereo and Amicus is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mereo BioPharma Group and Amicus Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amicus 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 Amicus Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amicus Therapeutics has no effect on the direction of Mereo BioPharma i.e., Mereo BioPharma and Amicus Therapeutics go up and down completely randomly.
Pair Corralation between Mereo BioPharma and Amicus Therapeutics
Given the investment horizon of 90 days Mereo BioPharma Group is expected to under-perform the Amicus Therapeutics. In addition to that, Mereo BioPharma is 1.44 times more volatile than Amicus Therapeutics. It trades about -0.1 of its total potential returns per unit of risk. Amicus Therapeutics is currently generating about -0.08 per unit of volatility. If you would invest 1,161 in Amicus Therapeutics on August 30, 2024 and sell it today you would lose (165.00) from holding Amicus Therapeutics or give up 14.21% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mereo BioPharma Group vs. Amicus Therapeutics
Performance |
Timeline |
Mereo BioPharma Group |
Amicus Therapeutics |
Mereo BioPharma and Amicus Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mereo BioPharma and Amicus Therapeutics
The main advantage of trading using opposite Mereo BioPharma and Amicus Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mereo BioPharma position performs unexpectedly, Amicus 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 Amicus Therapeutics will offset losses from the drop in Amicus Therapeutics' long position.Mereo BioPharma vs. Ikena Oncology | Mereo BioPharma vs. Eliem Therapeutics | Mereo BioPharma vs. HCW Biologics | Mereo BioPharma vs. Tempest Therapeutics |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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