Correlation Between Mesa Air and Orchestra BioMed

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

By analyzing existing cross correlation between Mesa Air Group and Orchestra BioMed Holdings, you can compare the effects of market volatilities on Mesa Air and Orchestra BioMed 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 Mesa Air with a short position of Orchestra BioMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Orchestra BioMed.

Diversification Opportunities for Mesa Air and Orchestra BioMed

-0.52

Correlation Coefficient

Mesa Air  Orchestra BioMed

Excellent diversification

The 3 months correlation between Mesa and Orchestra is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings and Mesa Air 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 Mesa Air Group are associated (or correlated) with Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Mesa Air i.e., Mesa Air and Orchestra BioMed go up and down completely randomly.

Pair Corralation between Mesa Air and Orchestra BioMed

Given the investment horizon of 90 days Mesa Air Group is expected to generate 0.67 times more return on investment than Orchestra BioMed. However, Mesa Air Group is 1.5 times less risky than Orchestra BioMed. It trades about 0.15 of its potential returns per unit of risk. Orchestra BioMed Holdings is currently generating about 0.02 per unit of risk. If you would invest  94.00  in Mesa Air Group on October 20, 2024 and sell it today you would earn a total of  39.00  from holding Mesa Air Group or generate 41.49% return on investment over 90 days.

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

Mesa Air Group  vs.  Orchestra BioMed Holdings

Mesa Air Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Orchestra BioMed Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orchestra BioMed Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Orchestra BioMed may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mesa Air and Orchestra BioMed

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

The idea behind Mesa Air Group and Orchestra BioMed Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.