Correlation Between Kezar Life and Stoke Therapeutics
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Stoke 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 Stoke 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 Stoke Therapeutics, you can compare the effects of market volatilities on Kezar Life and Stoke 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 Stoke Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Stoke Therapeutics.
Diversification Opportunities for Kezar Life and Stoke Therapeutics
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kezar and Stoke is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke 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 Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of Kezar Life i.e., Kezar Life and Stoke Therapeutics go up and down completely randomly.
Pair Corralation between Kezar Life and Stoke Therapeutics
Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the Stoke Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Kezar Life Sciences is 1.24 times less risky than Stoke Therapeutics. The stock trades about -0.07 of its potential returns per unit of risk. The Stoke Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 770.00 in Stoke Therapeutics on August 30, 2024 and sell it today you would earn a total of 421.00 from holding Stoke Therapeutics or generate 54.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kezar Life Sciences vs. Stoke Therapeutics
Performance |
| Timeline |
| Kezar Life Sciences |
| Stoke Therapeutics |
Kezar Life and Stoke Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Stoke Therapeutics
The main advantage of trading using opposite Kezar Life and Stoke Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Stoke 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 Stoke Therapeutics will offset losses from the drop in Stoke Therapeutics' long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| Stoke Therapeutics vs. Ikena Oncology | Stoke Therapeutics vs. Eliem Therapeutics | Stoke Therapeutics vs. HCW Biologics | Stoke Therapeutics vs. RenovoRx |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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