Correlation Between Kezar Life and Aldeyra
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Aldeyra 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 Kezar Life and Aldeyra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kezar Life Sciences and Aldeyra, you can compare the effects of market volatilities on Kezar Life and Aldeyra 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 Kezar Life with a short position of Aldeyra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Aldeyra.
Diversification Opportunities for Kezar Life and Aldeyra
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kezar and Aldeyra is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Aldeyra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldeyra and Kezar Life 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 Kezar Life Sciences are associated (or correlated) with Aldeyra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldeyra has no effect on the direction of Kezar Life i.e., Kezar Life and Aldeyra go up and down completely randomly.
Pair Corralation between Kezar Life and Aldeyra
Considering the 90-day investment horizon Kezar Life Sciences is expected to generate 1.9 times more return on investment than Aldeyra. However, Kezar Life is 1.9 times more volatile than Aldeyra. It trades about 0.12 of its potential returns per unit of risk. Aldeyra is currently generating about -0.07 per unit of risk. If you would invest 552.00 in Kezar Life Sciences on August 25, 2024 and sell it today you would earn a total of 198.00 from holding Kezar Life Sciences or generate 35.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kezar Life Sciences vs. Aldeyra
Performance |
| Timeline |
| Kezar Life Sciences |
| Aldeyra |
Kezar Life and Aldeyra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Aldeyra
The main advantage of trading using opposite Kezar Life and Aldeyra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Aldeyra 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 Aldeyra will offset losses from the drop in Aldeyra's long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| Aldeyra vs. Tarsus Pharmaceuticals | Aldeyra vs. Travere Therapeutics | Aldeyra vs. Eton Pharmaceuticals | Aldeyra vs. Viridian Therapeutics |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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