Correlation Between Kane Biotech and Algernon Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Kane Biotech and Algernon Pharmaceuticals 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 Kane Biotech and Algernon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kane Biotech and Algernon Pharmaceuticals, you can compare the effects of market volatilities on Kane Biotech and Algernon Pharmaceuticals 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 Kane Biotech with a short position of Algernon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kane Biotech and Algernon Pharmaceuticals.
Diversification Opportunities for Kane Biotech and Algernon Pharmaceuticals
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kane and Algernon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kane Biotech and Algernon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algernon Pharmaceuticals and Kane Biotech 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 Kane Biotech are associated (or correlated) with Algernon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algernon Pharmaceuticals has no effect on the direction of Kane Biotech i.e., Kane Biotech and Algernon Pharmaceuticals go up and down completely randomly.
Pair Corralation between Kane Biotech and Algernon Pharmaceuticals
Assuming the 90 days horizon Kane Biotech is expected to generate 1.05 times less return on investment than Algernon Pharmaceuticals. But when comparing it to its historical volatility, Kane Biotech is 1.54 times less risky than Algernon Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Algernon Pharmaceuticals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.70 in Algernon Pharmaceuticals on October 26, 2024 and sell it today you would lose (0.09) from holding Algernon Pharmaceuticals or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Kane Biotech vs. Algernon Pharmaceuticals
Performance |
| Timeline |
| Kane Biotech |
| Algernon Pharmaceuticals |
Kane Biotech and Algernon Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kane Biotech and Algernon Pharmaceuticals
The main advantage of trading using opposite Kane Biotech and Algernon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kane Biotech position performs unexpectedly, Algernon Pharmaceuticals 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 Algernon Pharmaceuticals will offset losses from the drop in Algernon Pharmaceuticals' long position.| Kane Biotech vs. Pharming Group NV | Kane Biotech vs. Health Sciences Gr | Kane Biotech vs. MedMira | Kane Biotech vs. Oxford Cannabinoid Technologies |
| Algernon Pharmaceuticals vs. Cellectis SA | Algernon Pharmaceuticals vs. Biotron Limited | Algernon Pharmaceuticals vs. Resverlogix Corp | Algernon Pharmaceuticals vs. Covalon Technologies |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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