Correlation Between Legend Biotech and ProKidney Corp
Can any of the company-specific risk be diversified away by investing in both Legend Biotech and ProKidney Corp 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 ProKidney Corp 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 ProKidney Corp, you can compare the effects of market volatilities on Legend Biotech and ProKidney Corp 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 ProKidney Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Biotech and ProKidney Corp.
Diversification Opportunities for Legend Biotech and ProKidney Corp
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legend and ProKidney is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Legend Biotech Corp and ProKidney Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProKidney Corp 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 ProKidney Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProKidney Corp has no effect on the direction of Legend Biotech i.e., Legend Biotech and ProKidney Corp go up and down completely randomly.
Pair Corralation between Legend Biotech and ProKidney Corp
Given the investment horizon of 90 days Legend Biotech Corp is expected to under-perform the ProKidney Corp. But the stock apears to be less risky and, when comparing its historical volatility, Legend Biotech Corp is 2.58 times less risky than ProKidney Corp. The stock trades about -0.1 of its potential returns per unit of risk. The ProKidney Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 160.00 in ProKidney Corp on September 1, 2024 and sell it today you would earn a total of 40.00 from holding ProKidney Corp or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Biotech Corp vs. ProKidney Corp
Performance |
| Timeline |
| Legend Biotech Corp |
| ProKidney Corp |
Legend Biotech and ProKidney Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Biotech and ProKidney Corp
The main advantage of trading using opposite Legend Biotech and ProKidney Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Biotech position performs unexpectedly, ProKidney Corp 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 ProKidney Corp will offset losses from the drop in ProKidney Corp's long position.| Legend Biotech vs. Vaxcyte | Legend Biotech vs. Apellis Pharmaceuticals | Legend Biotech vs. Travere Therapeutics | Legend Biotech vs. Akero Therapeutics |
| ProKidney Corp vs. Relay Therapeutics | ProKidney Corp vs. Stoke Therapeutics | ProKidney Corp vs. Pliant Therapeutics | ProKidney Corp vs. Black Diamond Therapeutics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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