Correlation Between C4 Therapeutics and Merus BV

Can any of the company-specific risk be diversified away by investing in both C4 Therapeutics and Merus BV 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 C4 Therapeutics and Merus BV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C4 Therapeutics and Merus BV, you can compare the effects of market volatilities on C4 Therapeutics and Merus BV 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 C4 Therapeutics with a short position of Merus BV. Check out your portfolio center. Please also check ongoing floating volatility patterns of C4 Therapeutics and Merus BV.

Diversification Opportunities for C4 Therapeutics and Merus BV

-0.81

Correlation Coefficient

C4 Therapeutics  Merus BV

Pay attention - limited upside

The 3 months correlation between CCCC and Merus is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding C4 Therapeutics and Merus BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merus BV and C4 Therapeutics 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 C4 Therapeutics are associated (or correlated) with Merus BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merus BV has no effect on the direction of C4 Therapeutics i.e., C4 Therapeutics and Merus BV go up and down completely randomly.

Pair Corralation between C4 Therapeutics and Merus BV

Given the investment horizon of 90 days C4 Therapeutics is expected to under-perform the Merus BV. In addition to that, C4 Therapeutics is 1.65 times more volatile than Merus BV. It trades about -0.23 of its total potential returns per unit of risk. Merus BV is currently generating about 0.06 per unit of volatility. If you would invest  4,189  in Merus BV on December 28, 2024 and sell it today you would earn a total of  294.00  from holding Merus BV or generate 7.02% return on investment over 90 days.

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

C4 Therapeutics  vs.  Merus BV

C4 Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days C4 Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Merus BV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Merus BV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Merus BV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with C4 Therapeutics and Merus BV

The main advantage of trading using opposite C4 Therapeutics and Merus BV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C4 Therapeutics position performs unexpectedly, Merus BV 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 Merus BV will offset losses from the drop in Merus BV's long position.

The idea behind C4 Therapeutics and Merus BV 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.