Correlation Between Krystal Biotech and Biomarin Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Krystal Biotech and Biomarin Pharmaceutical 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 Krystal Biotech and Biomarin Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krystal Biotech and Biomarin Pharmaceutical, you can compare the effects of market volatilities on Krystal Biotech and Biomarin Pharmaceutical 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 Krystal Biotech with a short position of Biomarin Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krystal Biotech and Biomarin Pharmaceutical.
Diversification Opportunities for Krystal Biotech and Biomarin Pharmaceutical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Krystal and Biomarin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Biomarin Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomarin Pharmaceutical and Krystal 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 Krystal Biotech are associated (or correlated) with Biomarin Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomarin Pharmaceutical has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Biomarin Pharmaceutical go up and down completely randomly.
Pair Corralation between Krystal Biotech and Biomarin Pharmaceutical
Given the investment horizon of 90 days Krystal Biotech is expected to generate 1.96 times more return on investment than Biomarin Pharmaceutical. However, Krystal Biotech is 1.96 times more volatile than Biomarin Pharmaceutical. It trades about 0.16 of its potential returns per unit of risk. Biomarin Pharmaceutical is currently generating about -0.21 per unit of risk. If you would invest 17,689 in Krystal Biotech on August 28, 2024 and sell it today you would earn a total of 1,767 from holding Krystal Biotech or generate 9.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krystal Biotech vs. Biomarin Pharmaceutical
Performance |
| Timeline |
| Krystal Biotech |
| Biomarin Pharmaceutical |
Krystal Biotech and Biomarin Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krystal Biotech and Biomarin Pharmaceutical
The main advantage of trading using opposite Krystal Biotech and Biomarin Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krystal Biotech position performs unexpectedly, Biomarin Pharmaceutical 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 Biomarin Pharmaceutical will offset losses from the drop in Biomarin Pharmaceutical's long position.| Krystal Biotech vs. Eliem Therapeutics | Krystal Biotech vs. HCW Biologics | Krystal Biotech vs. Scpharmaceuticals | Krystal Biotech vs. Milestone Pharmaceuticals |
| Biomarin Pharmaceutical vs. Alnylam Pharmaceuticals | Biomarin Pharmaceutical vs. Exelixis | Biomarin Pharmaceutical vs. Halozyme Therapeutics | Biomarin Pharmaceutical vs. Arrowhead 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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