Correlation Between MetaVia and Climb Bio

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

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

Diversification Opportunities for MetaVia and Climb Bio

0.82

Correlation Coefficient

MetaVia  Climb Bio

Very poor diversification

The 3 months correlation between MetaVia and Climb is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MetaVia and Climb Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Climb Bio and MetaVia 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 MetaVia are associated (or correlated) with Climb Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Climb Bio has no effect on the direction of MetaVia i.e., MetaVia and Climb Bio go up and down completely randomly.

Pair Corralation between MetaVia and Climb Bio

Given the investment horizon of 90 days MetaVia is expected to generate 1.06 times more return on investment than Climb Bio. However, MetaVia is 1.06 times more volatile than Climb Bio. It trades about -0.24 of its potential returns per unit of risk. Climb Bio is currently generating about -0.4 per unit of risk. If you would invest  235.00  in MetaVia on September 22, 2024 and sell it today you would lose (59.00) from holding MetaVia or give up 25.11% of portfolio value over 90 days.

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

MetaVia  vs.  Climb Bio

MetaVia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Climb Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Climb Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MetaVia and Climb Bio

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

The idea behind MetaVia and Climb Bio 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.