Correlation Between Merus BV and Pmv Pharmaceuticals

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

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

Diversification Opportunities for Merus BV and Pmv Pharmaceuticals

0.57

Correlation Coefficient

Merus BV  Pmv Pharmaceuticals

Very weak diversification

The 3 months correlation between Merus and Pmv is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Merus BV and Pmv Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pmv Pharmaceuticals and Merus BV 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 Merus BV are associated (or correlated) with Pmv Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pmv Pharmaceuticals has no effect on the direction of Merus BV i.e., Merus BV and Pmv Pharmaceuticals go up and down completely randomly.

Pair Corralation between Merus BV and Pmv Pharmaceuticals

Given the investment horizon of 90 days Merus BV is expected to generate 8.85 times less return on investment than Pmv Pharmaceuticals. But when comparing it to its historical volatility, Merus BV is 1.4 times less risky than Pmv Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Pmv Pharmaceuticals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Pmv Pharmaceuticals on August 15, 2024 and sell it today you would earn a total of  13.00  from holding Pmv Pharmaceuticals or generate 8.44% return on investment over 90 days.

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

Merus BV  vs.  Pmv Pharmaceuticals

Merus BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merus BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Merus BV is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pmv Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pmv Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Pmv Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Merus BV and Pmv Pharmaceuticals

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

The idea behind Merus BV and Pmv 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.