Correlation Between Ascendis Pharma and Krystal Biotech
Can any of the company-specific risk be diversified away by investing in both Ascendis Pharma and Krystal Biotech 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 Ascendis Pharma and Krystal Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ascendis Pharma AS and Krystal Biotech, you can compare the effects of market volatilities on Ascendis Pharma and Krystal Biotech 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 Ascendis Pharma with a short position of Krystal Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendis Pharma and Krystal Biotech.
Diversification Opportunities for Ascendis Pharma and Krystal Biotech
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ascendis and Krystal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ascendis Pharma AS and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and Ascendis Pharma 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 Ascendis Pharma AS are associated (or correlated) with Krystal Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krystal Biotech has no effect on the direction of Ascendis Pharma i.e., Ascendis Pharma and Krystal Biotech go up and down completely randomly.
Pair Corralation between Ascendis Pharma and Krystal Biotech
Given the investment horizon of 90 days Ascendis Pharma is expected to generate 3.69 times less return on investment than Krystal Biotech. But when comparing it to its historical volatility, Ascendis Pharma AS is 1.12 times less risky than Krystal Biotech. It trades about 0.02 of its potential returns per unit of risk. Krystal Biotech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,440 in Krystal Biotech on August 28, 2024 and sell it today you would earn a total of 12,016 from holding Krystal Biotech or generate 161.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ascendis Pharma AS vs. Krystal Biotech
Performance |
| Timeline |
| Ascendis Pharma AS |
| Krystal Biotech |
Ascendis Pharma and Krystal Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ascendis Pharma and Krystal Biotech
The main advantage of trading using opposite Ascendis Pharma and Krystal Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ascendis Pharma position performs unexpectedly, Krystal Biotech 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 Krystal Biotech will offset losses from the drop in Krystal Biotech's long position.| Ascendis Pharma vs. Eliem Therapeutics | Ascendis Pharma vs. HCW Biologics | Ascendis Pharma vs. Scpharmaceuticals | Ascendis Pharma vs. Milestone Pharmaceuticals |
| Krystal Biotech vs. Eliem Therapeutics | Krystal Biotech vs. HCW Biologics | Krystal Biotech vs. Scpharmaceuticals | Krystal Biotech vs. Milestone Pharmaceuticals |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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