Correlation Between Merus BV and Crinetics Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Merus BV and Crinetics 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 Crinetics 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 Crinetics Pharmaceuticals, you can compare the effects of market volatilities on Merus BV and Crinetics 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 Crinetics Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merus BV and Crinetics Pharmaceuticals.

Diversification Opportunities for Merus BV and Crinetics Pharmaceuticals

-0.19

Correlation Coefficient

Merus BV  Crinetics Pharmaceuticals

Good diversification

The 3 months correlation between Merus and Crinetics is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Merus BV and Crinetics Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crinetics 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 Crinetics Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crinetics Pharmaceuticals has no effect on the direction of Merus BV i.e., Merus BV and Crinetics Pharmaceuticals go up and down completely randomly.

Pair Corralation between Merus BV and Crinetics Pharmaceuticals

Given the investment horizon of 90 days Merus BV is expected to generate 0.73 times more return on investment than Crinetics Pharmaceuticals. However, Merus BV is 1.36 times less risky than Crinetics Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Crinetics Pharmaceuticals is currently generating about -0.15 per unit of risk. If you would invest  4,189  in Merus BV on December 29, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Merus BV  vs.  Crinetics Pharmaceuticals

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.

Crinetics Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crinetics Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Merus BV and Crinetics Pharmaceuticals

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

The idea behind Merus BV and Crinetics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.