Correlation Between Foghorn Therapeutics and Krystal Biotech
Can any of the company-specific risk be diversified away by investing in both Foghorn Therapeutics 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 Foghorn Therapeutics and Krystal Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foghorn Therapeutics and Krystal Biotech, you can compare the effects of market volatilities on Foghorn Therapeutics 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 Foghorn Therapeutics with a short position of Krystal Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foghorn Therapeutics and Krystal Biotech.
Diversification Opportunities for Foghorn Therapeutics and Krystal Biotech
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Foghorn and Krystal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Foghorn Therapeutics and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and Foghorn Therapeutics 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 Foghorn Therapeutics 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 Foghorn Therapeutics i.e., Foghorn Therapeutics and Krystal Biotech go up and down completely randomly.
Pair Corralation between Foghorn Therapeutics and Krystal Biotech
Given the investment horizon of 90 days Foghorn Therapeutics is expected to generate 1.96 times more return on investment than Krystal Biotech. However, Foghorn Therapeutics is 1.96 times more volatile than Krystal Biotech. It trades about 0.03 of its potential returns per unit of risk. Krystal Biotech is currently generating about 0.05 per unit of risk. If you would invest 810.00 in Foghorn Therapeutics on September 1, 2024 and sell it today you would lose (11.00) from holding Foghorn Therapeutics or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foghorn Therapeutics vs. Krystal Biotech
Performance |
| Timeline |
| Foghorn Therapeutics |
| Krystal Biotech |
Foghorn Therapeutics and Krystal Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foghorn Therapeutics and Krystal Biotech
The main advantage of trading using opposite Foghorn Therapeutics and Krystal Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foghorn Therapeutics 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.| Foghorn Therapeutics vs. C4 Therapeutics | Foghorn Therapeutics vs. Prelude Therapeutics | Foghorn Therapeutics vs. Rezolute | Foghorn Therapeutics vs. Shattuck Labs |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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