Correlation Between Kezar Life and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Kezar Life and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC ADR, you can compare the effects of market volatilities on Kezar Life and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and AstraZeneca PLC.
Diversification Opportunities for Kezar Life and AstraZeneca PLC
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kezar and AstraZeneca is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Kezar Life i.e., Kezar Life and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Kezar Life and AstraZeneca PLC
Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the AstraZeneca PLC. In addition to that, Kezar Life is 3.53 times more volatile than AstraZeneca PLC ADR. It trades about -0.07 of its total potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about 0.01 per unit of volatility. If you would invest 6,558 in AstraZeneca PLC ADR on August 24, 2024 and sell it today you would earn a total of 5.00 from holding AstraZeneca PLC ADR or generate 0.08% 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. AstraZeneca PLC ADR
Performance |
| Timeline |
| Kezar Life Sciences |
| AstraZeneca PLC ADR |
Kezar Life and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and AstraZeneca PLC
The main advantage of trading using opposite Kezar Life and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Kezar Life vs. Lyra Therapeutics | Kezar Life vs. Hookipa Pharma | Kezar Life vs. Cingulate Warrants | Kezar Life vs. SAB Biotherapeutics |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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