Correlation Between Kezar Life and Larimar Therapeutics
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Larimar Therapeutics 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 Larimar Therapeutics 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 Larimar Therapeutics, you can compare the effects of market volatilities on Kezar Life and Larimar Therapeutics 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 Larimar Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Larimar Therapeutics.
Diversification Opportunities for Kezar Life and Larimar Therapeutics
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kezar and Larimar is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics 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 Larimar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Larimar Therapeutics has no effect on the direction of Kezar Life i.e., Kezar Life and Larimar Therapeutics go up and down completely randomly.
Pair Corralation between Kezar Life and Larimar Therapeutics
Considering the 90-day investment horizon Kezar Life Sciences is expected to generate 0.22 times more return on investment than Larimar Therapeutics. However, Kezar Life Sciences is 4.6 times less risky than Larimar Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Larimar Therapeutics is currently generating about -0.17 per unit of risk. If you would invest 745.00 in Kezar Life Sciences on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Kezar Life Sciences or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kezar Life Sciences vs. Larimar Therapeutics
Performance |
| Timeline |
| Kezar Life Sciences |
| Larimar Therapeutics |
Kezar Life and Larimar Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Larimar Therapeutics
The main advantage of trading using opposite Kezar Life and Larimar Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Larimar Therapeutics 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 Larimar Therapeutics will offset losses from the drop in Larimar Therapeutics' long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| Larimar Therapeutics vs. Vaxcyte | Larimar Therapeutics vs. Syndax Pharmaceuticals | Larimar Therapeutics vs. Merus BV | Larimar Therapeutics vs. Sutro Biopharma |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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