Correlation Between Nkarta and Belite Bio
Can any of the company-specific risk be diversified away by investing in both Nkarta and Belite Bio 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 Nkarta and Belite Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nkarta Inc and Belite Bio ADR, you can compare the effects of market volatilities on Nkarta and Belite Bio 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 Nkarta with a short position of Belite Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nkarta and Belite Bio.
Diversification Opportunities for Nkarta and Belite Bio
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nkarta and Belite is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Belite Bio ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belite Bio ADR and Nkarta 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 Nkarta Inc are associated (or correlated) with Belite Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belite Bio ADR has no effect on the direction of Nkarta i.e., Nkarta and Belite Bio go up and down completely randomly.
Pair Corralation between Nkarta and Belite Bio
Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Belite Bio. In addition to that, Nkarta is 1.63 times more volatile than Belite Bio ADR. It trades about -0.11 of its total potential returns per unit of risk. Belite Bio ADR is currently generating about 0.08 per unit of volatility. If you would invest 4,885 in Belite Bio ADR on September 1, 2024 and sell it today you would earn a total of 1,441 from holding Belite Bio ADR or generate 29.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nkarta Inc vs. Belite Bio ADR
Performance |
| Timeline |
| Nkarta Inc |
| Belite Bio ADR |
Nkarta and Belite Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nkarta and Belite Bio
The main advantage of trading using opposite Nkarta and Belite Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nkarta position performs unexpectedly, Belite Bio 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 Belite Bio will offset losses from the drop in Belite Bio's long position.| Nkarta vs. Monte Rosa Therapeutics | Nkarta vs. Lyell Immunopharma | Nkarta vs. Generation Bio Co | Nkarta vs. Sana Biotechnology |
| Belite Bio vs. Anebulo Pharmaceuticals | Belite Bio vs. Mineralys Therapeutics, Common | Belite Bio vs. AN2 Therapeutics | Belite Bio vs. Aerovate 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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