Correlation Between Merus BV and Telix Pharmaceuticals

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

Diversification Opportunities for Merus BV and Telix Pharmaceuticals

-0.58

Correlation Coefficient

Merus BV  Telix Pharmaceuticals

Excellent diversification

The 3 months correlation between Merus and Telix is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Merus BV and Telix Pharmaceuticals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix 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 Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of Merus BV i.e., Merus BV and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between Merus BV and Telix Pharmaceuticals

Given the investment horizon of 90 days Merus BV is expected to generate 2.08 times less return on investment than Telix Pharmaceuticals. But when comparing it to its historical volatility, Merus BV is 1.04 times less risky than Telix Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Telix Pharmaceuticals Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  660.00  in Telix Pharmaceuticals Limited on October 7, 2024 and sell it today you would earn a total of  782.00  from holding Telix Pharmaceuticals Limited or generate 118.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Merus BV  vs.  Telix Pharmaceuticals Limited

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Telix Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telix Pharmaceuticals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Telix Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Merus BV and Telix Pharmaceuticals

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

The idea behind Merus BV and Telix Pharmaceuticals Limited 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.