Correlation Between Kezar Life and Atara Biotherapeutics
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Atara Biotherapeutics 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 Atara Biotherapeutics 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 Atara Biotherapeutics, you can compare the effects of market volatilities on Kezar Life and Atara Biotherapeutics 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 Atara Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Atara Biotherapeutics.
Diversification Opportunities for Kezar Life and Atara Biotherapeutics
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kezar and Atara is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Atara Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atara Biotherapeutics 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 Atara Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atara Biotherapeutics has no effect on the direction of Kezar Life i.e., Kezar Life and Atara Biotherapeutics go up and down completely randomly.
Pair Corralation between Kezar Life and Atara Biotherapeutics
Considering the 90-day investment horizon Kezar Life is expected to generate 2.3 times less return on investment than Atara Biotherapeutics. But when comparing it to its historical volatility, Kezar Life Sciences is 2.21 times less risky than Atara Biotherapeutics. It trades about 0.02 of its potential returns per unit of risk. Atara Biotherapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,225 in Atara Biotherapeutics on August 26, 2024 and sell it today you would lose (2,078) from holding Atara Biotherapeutics or give up 64.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kezar Life Sciences vs. Atara Biotherapeutics
Performance |
| Timeline |
| Kezar Life Sciences |
| Atara Biotherapeutics |
Kezar Life and Atara Biotherapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Atara Biotherapeutics
The main advantage of trading using opposite Kezar Life and Atara Biotherapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Atara Biotherapeutics 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 Atara Biotherapeutics will offset losses from the drop in Atara Biotherapeutics' long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| Atara Biotherapeutics vs. Fate Therapeutics | Atara Biotherapeutics vs. Sana Biotechnology | Atara Biotherapeutics vs. Caribou Biosciences | Atara Biotherapeutics vs. Arcus Biosciences |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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