Correlation Between BeyondSpring and Mirum Pharmaceuticals

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

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

Diversification Opportunities for BeyondSpring and Mirum Pharmaceuticals

0.48

Correlation Coefficient

BeyondSpring  Mirum Pharmaceuticals

Very weak diversification

The 3 months correlation between BeyondSpring and Mirum is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BeyondSpring and Mirum Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirum Pharmaceuticals and BeyondSpring 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 BeyondSpring 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 BeyondSpring i.e., BeyondSpring and Mirum Pharmaceuticals go up and down completely randomly.

Pair Corralation between BeyondSpring and Mirum Pharmaceuticals

Given the investment horizon of 90 days BeyondSpring is expected to under-perform the Mirum Pharmaceuticals. In addition to that, BeyondSpring is 1.13 times more volatile than Mirum Pharmaceuticals. It trades about -0.03 of its total potential returns per unit of risk. Mirum Pharmaceuticals is currently generating about 0.08 per unit of volatility. If you would invest  4,156  in Mirum Pharmaceuticals on December 27, 2024 and sell it today you would earn a total of  452.00  from holding Mirum Pharmaceuticals or generate 10.88% return on investment over 90 days.

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

BeyondSpring  vs.  Mirum Pharmaceuticals

BeyondSpring

Risk-Adjusted Performance

Very Weak

Over the last 90 days BeyondSpring has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BeyondSpring is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Mirum Pharmaceuticals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mirum Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Mirum Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BeyondSpring and Mirum Pharmaceuticals

The main advantage of trading using opposite BeyondSpring and Mirum Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BeyondSpring 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 BeyondSpring 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.

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.