Correlation Between Kezar Life and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Terns 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 Terns 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 Terns Pharmaceuticals, you can compare the effects of market volatilities on Kezar Life and Terns 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 Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Terns Pharmaceuticals.
Diversification Opportunities for Kezar Life and Terns Pharmaceuticals
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kezar and Terns is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns 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 Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of Kezar Life i.e., Kezar Life and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between Kezar Life and Terns Pharmaceuticals
Considering the 90-day investment horizon Kezar Life is expected to generate 9.39 times less return on investment than Terns Pharmaceuticals. But when comparing it to its historical volatility, Kezar Life Sciences is 1.23 times less risky than Terns Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 409.00 in Terns Pharmaceuticals on August 24, 2024 and sell it today you would earn a total of 167.00 from holding Terns Pharmaceuticals or generate 40.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kezar Life Sciences vs. Terns Pharmaceuticals
Performance |
| Timeline |
| Kezar Life Sciences |
| Terns Pharmaceuticals |
Kezar Life and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Terns Pharmaceuticals
The main advantage of trading using opposite Kezar Life and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Terns 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 Terns Pharmaceuticals will offset losses from the drop in Terns Pharmaceuticals' long position.| Kezar Life vs. Lyra Therapeutics | Kezar Life vs. Hookipa Pharma | Kezar Life vs. Cingulate Warrants | Kezar Life vs. SAB Biotherapeutics |
| Terns Pharmaceuticals vs. Lyra Therapeutics | Terns Pharmaceuticals vs. Hookipa Pharma | Terns Pharmaceuticals vs. Cingulate Warrants | Terns Pharmaceuticals vs. SAB Biotherapeutics |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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