Correlation Between Blueprint Medicines and Krystal Biotech
Can any of the company-specific risk be diversified away by investing in both Blueprint Medicines 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 Blueprint Medicines and Krystal Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blueprint Medicines Corp and Krystal Biotech, you can compare the effects of market volatilities on Blueprint Medicines 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 Blueprint Medicines with a short position of Krystal Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blueprint Medicines and Krystal Biotech.
Diversification Opportunities for Blueprint Medicines and Krystal Biotech
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Blueprint and Krystal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Blueprint Medicines Corp and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and Blueprint Medicines 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 Blueprint Medicines Corp 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 Blueprint Medicines i.e., Blueprint Medicines and Krystal Biotech go up and down completely randomly.
Pair Corralation between Blueprint Medicines and Krystal Biotech
Given the investment horizon of 90 days Blueprint Medicines is expected to generate 1.16 times less return on investment than Krystal Biotech. But when comparing it to its historical volatility, Blueprint Medicines Corp is 1.11 times less risky than Krystal Biotech. It trades about 0.07 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 8,035 in Krystal Biotech on August 24, 2024 and sell it today you would earn a total of 11,005 from holding Krystal Biotech or generate 136.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blueprint Medicines Corp vs. Krystal Biotech
Performance |
| Timeline |
| Blueprint Medicines Corp |
| Krystal Biotech |
Blueprint Medicines and Krystal Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blueprint Medicines and Krystal Biotech
The main advantage of trading using opposite Blueprint Medicines and Krystal Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blueprint Medicines 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.| Blueprint Medicines vs. Lyra Therapeutics | Blueprint Medicines vs. Hookipa Pharma | Blueprint Medicines vs. Cingulate Warrants | Blueprint Medicines vs. SAB Biotherapeutics |
| Krystal Biotech vs. MeiraGTx Holdings PLC | Krystal Biotech vs. Apellis Pharmaceuticals | Krystal Biotech vs. Regenxbio | Krystal Biotech vs. Rhythm 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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