Correlation Between Krystal Biotech and Sarepta Therapeutics
Can any of the company-specific risk be diversified away by investing in both Krystal Biotech and Sarepta 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 Krystal Biotech and Sarepta Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krystal Biotech and Sarepta Therapeutics, you can compare the effects of market volatilities on Krystal Biotech and Sarepta 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 Krystal Biotech with a short position of Sarepta Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krystal Biotech and Sarepta Therapeutics.
Diversification Opportunities for Krystal Biotech and Sarepta Therapeutics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Krystal and Sarepta is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Sarepta Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarepta Therapeutics 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 Sarepta Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarepta Therapeutics has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Sarepta Therapeutics go up and down completely randomly.
Pair Corralation between Krystal Biotech and Sarepta Therapeutics
Given the investment horizon of 90 days Krystal Biotech is expected to generate 1.35 times more return on investment than Sarepta Therapeutics. However, Krystal Biotech is 1.35 times more volatile than Sarepta Therapeutics. It trades about -0.05 of its potential returns per unit of risk. Sarepta Therapeutics is currently generating about -0.2 per unit of risk. If you would invest 20,051 in Krystal Biotech on August 24, 2024 and sell it today you would lose (1,822) from holding Krystal Biotech or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krystal Biotech vs. Sarepta Therapeutics
Performance |
| Timeline |
| Krystal Biotech |
| Sarepta Therapeutics |
Krystal Biotech and Sarepta Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krystal Biotech and Sarepta Therapeutics
The main advantage of trading using opposite Krystal Biotech and Sarepta Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krystal Biotech position performs unexpectedly, Sarepta 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 Sarepta Therapeutics will offset losses from the drop in Sarepta Therapeutics' long position.| Krystal Biotech vs. MeiraGTx Holdings PLC | Krystal Biotech vs. Apellis Pharmaceuticals | Krystal Biotech vs. Regenxbio | Krystal Biotech vs. Rhythm Pharmaceuticals |
| Sarepta Therapeutics vs. Krystal Biotech | Sarepta Therapeutics vs. PTC Therapeutics | Sarepta Therapeutics vs. Iovance Biotherapeutics | Sarepta Therapeutics vs. Madrigal 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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