Correlation Between Mirati Ther and Madrigal Pharmaceuticals

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

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

Diversification Opportunities for Mirati Ther and Madrigal Pharmaceuticals

-0.47

Correlation Coefficient

Mirati Ther  Madrigal Pharmaceuticals

Very good diversification

The 3 months correlation between Mirati and Madrigal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mirati Ther and Madrigal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madrigal Pharmaceuticals and Mirati Ther 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 Mirati Ther are associated (or correlated) with Madrigal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madrigal Pharmaceuticals has no effect on the direction of Mirati Ther i.e., Mirati Ther and Madrigal Pharmaceuticals go up and down completely randomly.

Pair Corralation between Mirati Ther and Madrigal Pharmaceuticals

If you would invest  23,640  in Madrigal Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of  9,505  from holding Madrigal Pharmaceuticals or generate 40.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Mirati Ther  vs.  Madrigal Pharmaceuticals

Mirati Ther

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mirati Ther has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Mirati Ther is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Madrigal Pharmaceuticals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Madrigal Pharmaceuticals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Madrigal Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mirati Ther and Madrigal Pharmaceuticals

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

The idea behind Mirati Ther and Madrigal 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.