Correlation Between Kezar Life and Galmed Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Galmed Pharmaceuticals 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 Galmed Pharmaceuticals 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 Galmed Pharmaceuticals, you can compare the effects of market volatilities on Kezar Life and Galmed Pharmaceuticals 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 Galmed Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Galmed Pharmaceuticals.
Diversification Opportunities for Kezar Life and Galmed Pharmaceuticals
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kezar and Galmed is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Galmed Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galmed Pharmaceuticals 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 Galmed Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galmed Pharmaceuticals has no effect on the direction of Kezar Life i.e., Kezar Life and Galmed Pharmaceuticals go up and down completely randomly.
Pair Corralation between Kezar Life and Galmed Pharmaceuticals
Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the Galmed Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Kezar Life Sciences is 3.22 times less risky than Galmed Pharmaceuticals. The stock trades about -0.07 of its potential returns per unit of risk. The Galmed Pharmaceuticals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5,704 in Galmed Pharmaceuticals on August 26, 2024 and sell it today you would lose (5,429) from holding Galmed Pharmaceuticals or give up 95.18% 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. Galmed Pharmaceuticals
Performance |
| Timeline |
| Kezar Life Sciences |
| Galmed Pharmaceuticals |
Kezar Life and Galmed Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Galmed Pharmaceuticals
The main advantage of trading using opposite Kezar Life and Galmed Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Galmed Pharmaceuticals 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 Galmed Pharmaceuticals will offset losses from the drop in Galmed Pharmaceuticals' long position.| Kezar Life vs. Eliem Therapeutics | Kezar Life vs. HCW Biologics | Kezar Life vs. Scpharmaceuticals | Kezar Life vs. Milestone Pharmaceuticals |
| Galmed Pharmaceuticals vs. Affimed NV | Galmed Pharmaceuticals vs. Abeona Therapeutics | Galmed Pharmaceuticals vs. Akebia Ther | Galmed Pharmaceuticals vs. Kodiak Sciences |
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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