Correlation Between Kezar Life and Ocular Therapeutix
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Ocular Therapeutix 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 Ocular Therapeutix 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 Ocular Therapeutix, you can compare the effects of market volatilities on Kezar Life and Ocular Therapeutix 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 Ocular Therapeutix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Ocular Therapeutix.
Diversification Opportunities for Kezar Life and Ocular Therapeutix
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kezar and Ocular is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix 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 Ocular Therapeutix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocular Therapeutix has no effect on the direction of Kezar Life i.e., Kezar Life and Ocular Therapeutix go up and down completely randomly.
Pair Corralation between Kezar Life and Ocular Therapeutix
Considering the 90-day investment horizon Kezar Life Sciences is expected to generate 1.03 times more return on investment than Ocular Therapeutix. However, Kezar Life is 1.03 times more volatile than Ocular Therapeutix. It trades about -0.02 of its potential returns per unit of risk. Ocular Therapeutix is currently generating about -0.27 per unit of risk. If you would invest 657.00 in Kezar Life Sciences on November 3, 2024 and sell it today you would lose (9.00) from holding Kezar Life Sciences or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kezar Life Sciences vs. Ocular Therapeutix
Performance |
| Timeline |
| Kezar Life Sciences |
| Ocular Therapeutix |
Kezar Life and Ocular Therapeutix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Ocular Therapeutix
The main advantage of trading using opposite Kezar Life and Ocular Therapeutix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Ocular Therapeutix 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 Ocular Therapeutix will offset losses from the drop in Ocular Therapeutix's long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| Ocular Therapeutix vs. CytomX Therapeutics | Ocular Therapeutix vs. Assembly Biosciences | Ocular Therapeutix vs. Spero Therapeutics | Ocular Therapeutix vs. Achilles Therapeutics PLC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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