Correlation Between Nkarta and Celularity
Can any of the company-specific risk be diversified away by investing in both Nkarta and Celularity 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 Celularity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nkarta Inc and Celularity, you can compare the effects of market volatilities on Nkarta and Celularity 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 Celularity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nkarta and Celularity.
Diversification Opportunities for Nkarta and Celularity
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nkarta and Celularity is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Celularity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celularity 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 Celularity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celularity has no effect on the direction of Nkarta i.e., Nkarta and Celularity go up and down completely randomly.
Pair Corralation between Nkarta and Celularity
Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Celularity. But the stock apears to be less risky and, when comparing its historical volatility, Nkarta Inc is 5.12 times less risky than Celularity. The stock trades about -0.28 of its potential returns per unit of risk. The Celularity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.88 in Celularity on August 29, 2024 and sell it today you would lose (0.31) from holding Celularity or give up 16.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
Nkarta Inc vs. Celularity
Performance |
| Timeline |
| Nkarta Inc |
| Celularity |
Nkarta and Celularity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nkarta and Celularity
The main advantage of trading using opposite Nkarta and Celularity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nkarta position performs unexpectedly, Celularity 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 Celularity will offset losses from the drop in Celularity's long position.The idea behind Nkarta Inc and Celularity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Celularity vs. Bright Minds Biosciences | Celularity vs. HP Inc | Celularity vs. Intel | Celularity vs. Chevron Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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