Correlation Between Legend Biotech and Kalvista Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and Kalvista 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 Legend Biotech and Kalvista Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legend Biotech Corp and Kalvista Pharmaceuticals, you can compare the effects of market volatilities on Legend Biotech and Kalvista 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 Legend Biotech with a short position of Kalvista Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and Kalvista Pharmaceuticals.
Diversification Opportunities for Legend Biotech and Kalvista Pharmaceuticals
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Legend and Kalvista is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and Kalvista Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalvista Pharmaceuticals and Legend Biotech 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 Legend Biotech Corp are associated (or correlated) with Kalvista Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalvista Pharmaceuticals has no effect on the direction of Legend Biotech i.e., Legend Biotech and Kalvista Pharmaceuticals go up and down completely randomly.
Pair Corralation between Legend Biotech and Kalvista Pharmaceuticals
Given the investment horizon of 90 days Legend Biotech is expected to generate 11.07 times less return on investment than Kalvista Pharmaceuticals. But when comparing it to its historical volatility, Legend Biotech Corp is 1.15 times less risky than Kalvista Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Kalvista Pharmaceuticals is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 877.00 in Kalvista Pharmaceuticals on November 27, 2024 and sell it today you would earn a total of 178.00 from holding Kalvista Pharmaceuticals or generate 20.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Legend Biotech Corp vs. Kalvista Pharmaceuticals
Performance |
| Timeline |
| Legend Biotech Corp |
| Kalvista Pharmaceuticals |
Legend Biotech and Kalvista Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and Kalvista Pharmaceuticals
The main advantage of trading using opposite Legend Biotech and Kalvista Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, Kalvista 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 Kalvista Pharmaceuticals will offset losses from the drop in Kalvista Pharmaceuticals' long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| Kalvista Pharmaceuticals vs. Crinetics Pharmaceuticals | Kalvista Pharmaceuticals vs. Kura Oncology | Kalvista Pharmaceuticals vs. Viridian Therapeutics | Kalvista Pharmaceuticals vs. Replimune Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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