Correlation Between BioCardia and Krystal Biotech
Can any of the company-specific risk be diversified away by investing in both BioCardia 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 BioCardia and Krystal Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioCardia and Krystal Biotech, you can compare the effects of market volatilities on BioCardia 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 BioCardia with a short position of Krystal Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioCardia and Krystal Biotech.
Diversification Opportunities for BioCardia and Krystal Biotech
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BioCardia and Krystal is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding BioCardia and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and BioCardia 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 BioCardia 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 BioCardia i.e., BioCardia and Krystal Biotech go up and down completely randomly.
Pair Corralation between BioCardia and Krystal Biotech
Assuming the 90 days horizon BioCardia is expected to generate 28.73 times more return on investment than Krystal Biotech. However, BioCardia is 28.73 times more volatile than Krystal Biotech. It trades about 0.11 of its potential returns per unit of risk. Krystal Biotech is currently generating about 0.07 per unit of risk. If you would invest 11.00 in BioCardia on August 25, 2024 and sell it today you would lose (11.00) from holding BioCardia or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 41.33% |
| Values | Daily Returns |
BioCardia vs. Krystal Biotech
Performance |
| Timeline |
| BioCardia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Krystal Biotech |
BioCardia and Krystal Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioCardia and Krystal Biotech
The main advantage of trading using opposite BioCardia and Krystal Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioCardia 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.The idea behind BioCardia and Krystal Biotech 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.| Krystal Biotech vs. Eliem Therapeutics | Krystal Biotech vs. HCW Biologics | Krystal Biotech vs. RenovoRx | Krystal Biotech vs. Tempest Therapeutics |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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