Correlation Between Puma Biotechnology and Mersana Therapeutics
Can any of the company-specific risk be diversified away by investing in both Puma Biotechnology and Mersana Therapeutics 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 Puma Biotechnology and Mersana Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puma Biotechnology and Mersana Therapeutics, you can compare the effects of market volatilities on Puma Biotechnology and Mersana Therapeutics 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 Puma Biotechnology with a short position of Mersana Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Biotechnology and Mersana Therapeutics.
Diversification Opportunities for Puma Biotechnology and Mersana Therapeutics
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Puma and Mersana is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Mersana Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersana Therapeutics and Puma Biotechnology 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 Puma Biotechnology are associated (or correlated) with Mersana Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersana Therapeutics has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Mersana Therapeutics go up and down completely randomly.
Pair Corralation between Puma Biotechnology and Mersana Therapeutics
Given the investment horizon of 90 days Puma Biotechnology is expected to generate 0.56 times more return on investment than Mersana Therapeutics. However, Puma Biotechnology is 1.79 times less risky than Mersana Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Mersana Therapeutics is currently generating about -0.18 per unit of risk. If you would invest 308.00 in Puma Biotechnology on December 27, 2024 and sell it today you would earn a total of 1.50 from holding Puma Biotechnology or generate 0.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Puma Biotechnology vs. Mersana Therapeutics
Performance |
Timeline |
Puma Biotechnology |
Mersana Therapeutics |
Puma Biotechnology and Mersana Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Puma Biotechnology and Mersana Therapeutics
The main advantage of trading using opposite Puma Biotechnology and Mersana Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Biotechnology position performs unexpectedly, Mersana Therapeutics 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 Mersana Therapeutics will offset losses from the drop in Mersana Therapeutics' long position.Puma Biotechnology vs. Ultragenyx | Puma Biotechnology vs. Crinetics Pharmaceuticals | Puma Biotechnology vs. Arvinas | Puma Biotechnology vs. Revolution Medicines |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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