Correlation Between Larimar Therapeutics and Kiniksa Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Larimar Therapeutics and Kiniksa 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 Larimar Therapeutics and Kiniksa Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Larimar Therapeutics and Kiniksa Pharmaceuticals, you can compare the effects of market volatilities on Larimar Therapeutics and Kiniksa 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 Larimar Therapeutics with a short position of Kiniksa Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Larimar Therapeutics and Kiniksa Pharmaceuticals.
Diversification Opportunities for Larimar Therapeutics and Kiniksa Pharmaceuticals
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Larimar and Kiniksa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and Kiniksa Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiniksa Pharmaceuticals and Larimar Therapeutics 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 Larimar Therapeutics are associated (or correlated) with Kiniksa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiniksa Pharmaceuticals has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and Kiniksa Pharmaceuticals go up and down completely randomly.
Pair Corralation between Larimar Therapeutics and Kiniksa Pharmaceuticals
Given the investment horizon of 90 days Larimar Therapeutics is expected to under-perform the Kiniksa Pharmaceuticals. In addition to that, Larimar Therapeutics is 1.26 times more volatile than Kiniksa Pharmaceuticals. It trades about -0.09 of its total potential returns per unit of risk. Kiniksa Pharmaceuticals is currently generating about 0.01 per unit of volatility. If you would invest 1,994 in Kiniksa Pharmaceuticals on November 2, 2024 and sell it today you would lose (6.00) from holding Kiniksa Pharmaceuticals or give up 0.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Larimar Therapeutics vs. Kiniksa Pharmaceuticals
Performance |
| Timeline |
| Larimar Therapeutics |
| Kiniksa Pharmaceuticals |
Larimar Therapeutics and Kiniksa Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Larimar Therapeutics and Kiniksa Pharmaceuticals
The main advantage of trading using opposite Larimar Therapeutics and Kiniksa Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Larimar Therapeutics position performs unexpectedly, Kiniksa 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 Kiniksa Pharmaceuticals will offset losses from the drop in Kiniksa Pharmaceuticals' long position.| Larimar Therapeutics vs. Vaxcyte | Larimar Therapeutics vs. Syndax Pharmaceuticals | Larimar Therapeutics vs. Merus BV | Larimar Therapeutics vs. Sutro Biopharma |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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