Correlation Between Kezar Life and Durect
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Durect 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 Durect 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 Durect, you can compare the effects of market volatilities on Kezar Life and Durect 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 Durect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Durect.
Diversification Opportunities for Kezar Life and Durect
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kezar and Durect is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Durect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Durect 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 Durect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Durect has no effect on the direction of Kezar Life i.e., Kezar Life and Durect go up and down completely randomly.
Pair Corralation between Kezar Life and Durect
Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the Durect. But the stock apears to be less risky and, when comparing its historical volatility, Kezar Life Sciences is 1.46 times less risky than Durect. The stock trades about -0.07 of its potential returns per unit of risk. The Durect is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 364.00 in Durect on August 30, 2024 and sell it today you would lose (272.75) from holding Durect or give up 74.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kezar Life Sciences vs. Durect
Performance |
| Timeline |
| Kezar Life Sciences |
| Durect |
Kezar Life and Durect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Durect
The main advantage of trading using opposite Kezar Life and Durect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Durect 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 Durect will offset losses from the drop in Durect's long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| Durect vs. Shuttle Pharmaceuticals | Durect vs. Organogenesis Holdings | Durect vs. Alpha Teknova | Durect vs. Sonoma 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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