Correlation Between Kezar Life and HCW Biologics
Can any of the company-specific risk be diversified away by investing in both Kezar Life and HCW Biologics 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 HCW Biologics 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 HCW Biologics, you can compare the effects of market volatilities on Kezar Life and HCW Biologics 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 HCW Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and HCW Biologics.
Diversification Opportunities for Kezar Life and HCW Biologics
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kezar and HCW is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and HCW Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCW Biologics 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 HCW Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCW Biologics has no effect on the direction of Kezar Life i.e., Kezar Life and HCW Biologics go up and down completely randomly.
Pair Corralation between Kezar Life and HCW Biologics
Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the HCW Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Kezar Life Sciences is 3.35 times less risky than HCW Biologics. The stock trades about -0.07 of its potential returns per unit of risk. The HCW Biologics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 207.00 in HCW Biologics on August 25, 2024 and sell it today you would lose (130.00) from holding HCW Biologics or give up 62.8% 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. HCW Biologics
Performance |
| Timeline |
| Kezar Life Sciences |
| HCW Biologics |
Kezar Life and HCW Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and HCW Biologics
The main advantage of trading using opposite Kezar Life and HCW Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, HCW Biologics 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 HCW Biologics will offset losses from the drop in HCW Biologics' long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| HCW Biologics vs. Anebulo Pharmaceuticals | HCW Biologics vs. Rezolute | HCW Biologics vs. Eliem Therapeutics | HCW Biologics vs. Molecular Partners AG |
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 CEOs Directory module to screen CEOs from public companies around the world.
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