Correlation Between Gossamer Bio and Kronos Bio
Can any of the company-specific risk be diversified away by investing in both Gossamer Bio and Kronos Bio 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 Gossamer Bio and Kronos Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gossamer Bio and Kronos Bio, you can compare the effects of market volatilities on Gossamer Bio and Kronos Bio 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 Gossamer Bio with a short position of Kronos Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gossamer Bio and Kronos Bio.
Diversification Opportunities for Gossamer Bio and Kronos Bio
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gossamer and Kronos is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gossamer Bio and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Gossamer Bio 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 Gossamer Bio are associated (or correlated) with Kronos Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Bio has no effect on the direction of Gossamer Bio i.e., Gossamer Bio and Kronos Bio go up and down completely randomly.
Pair Corralation between Gossamer Bio and Kronos Bio
Given the investment horizon of 90 days Gossamer Bio is expected to under-perform the Kronos Bio. But the stock apears to be less risky and, when comparing its historical volatility, Gossamer Bio is 1.34 times less risky than Kronos Bio. The stock trades about -0.27 of its potential returns per unit of risk. The Kronos Bio is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Kronos Bio on August 31, 2024 and sell it today you would lose (4.00) from holding Kronos Bio or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gossamer Bio vs. Kronos Bio
Performance |
| Timeline |
| Gossamer Bio |
| Kronos Bio |
Gossamer Bio and Kronos Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gossamer Bio and Kronos Bio
The main advantage of trading using opposite Gossamer Bio and Kronos Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gossamer Bio position performs unexpectedly, Kronos Bio 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 Kronos Bio will offset losses from the drop in Kronos Bio's long position.| Gossamer Bio vs. Biomea Fusion | Gossamer Bio vs. Stoke Therapeutics | Gossamer Bio vs. Akero Therapeutics | Gossamer Bio vs. Replimune Group |
| Kronos Bio vs. Cyclerion Therapeutics | Kronos Bio vs. Larimar Therapeutics | Kronos Bio vs. Addex Therapeutics | Kronos Bio vs. Achilles Therapeutics PLC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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