Correlation Between ELYM Old and Keros Therapeutics
Can any of the company-specific risk be diversified away by investing in both ELYM Old and Keros 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 ELYM Old and Keros Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELYM Old and Keros Therapeutics, you can compare the effects of market volatilities on ELYM Old and Keros 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 ELYM Old with a short position of Keros Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELYM Old and Keros Therapeutics.
Diversification Opportunities for ELYM Old and Keros Therapeutics
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ELYM and Keros is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ELYM Old and Keros Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keros Therapeutics and ELYM Old 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 ELYM Old are associated (or correlated) with Keros Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keros Therapeutics has no effect on the direction of ELYM Old i.e., ELYM Old and Keros Therapeutics go up and down completely randomly.
Pair Corralation between ELYM Old and Keros Therapeutics
Given the investment horizon of 90 days ELYM Old is expected to under-perform the Keros Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, ELYM Old is 1.71 times less risky than Keros Therapeutics. The stock trades about -0.22 of its potential returns per unit of risk. The Keros Therapeutics is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 4,779 in Keros Therapeutics on November 2, 2024 and sell it today you would lose (3,608) from holding Keros Therapeutics or give up 75.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 65.05% |
| Values | Daily Returns |
ELYM Old vs. Keros Therapeutics
Performance |
| Timeline |
| ELYM Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Keros Therapeutics |
ELYM Old and Keros Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELYM Old and Keros Therapeutics
The main advantage of trading using opposite ELYM Old and Keros Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELYM Old position performs unexpectedly, Keros 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 Keros Therapeutics will offset losses from the drop in Keros Therapeutics' long position.The idea behind ELYM Old and Keros Therapeutics 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.| Keros Therapeutics vs. Ideaya Biosciences | Keros Therapeutics vs. AnaptysBio | Keros Therapeutics vs. MeiraGTx Holdings PLC | Keros Therapeutics vs. Janux 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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