Correlation Between Nkarta and Design Therapeutics
Can any of the company-specific risk be diversified away by investing in both Nkarta and Design Therapeutics 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 Design Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nkarta Inc and Design Therapeutics, you can compare the effects of market volatilities on Nkarta and Design Therapeutics 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 Design Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nkarta and Design Therapeutics.
Diversification Opportunities for Nkarta and Design Therapeutics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nkarta and Design is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Design Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design Therapeutics 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 Design Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design Therapeutics has no effect on the direction of Nkarta i.e., Nkarta and Design Therapeutics go up and down completely randomly.
Pair Corralation between Nkarta and Design Therapeutics
Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Design Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Nkarta Inc is 1.03 times less risky than Design Therapeutics. The stock trades about -0.11 of its potential returns per unit of risk. The Design Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 407.00 in Design Therapeutics on September 1, 2024 and sell it today you would earn a total of 193.00 from holding Design Therapeutics or generate 47.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nkarta Inc vs. Design Therapeutics
Performance |
| Timeline |
| Nkarta Inc |
| Design Therapeutics |
Nkarta and Design Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nkarta and Design Therapeutics
The main advantage of trading using opposite Nkarta and Design Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nkarta position performs unexpectedly, Design Therapeutics 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 Design Therapeutics will offset losses from the drop in Design Therapeutics' long position.| Nkarta vs. Monte Rosa Therapeutics | Nkarta vs. Lyell Immunopharma | Nkarta vs. Generation Bio Co | Nkarta vs. Sana Biotechnology |
| Design Therapeutics vs. Monte Rosa Therapeutics | Design Therapeutics vs. Werewolf Therapeutics | Design Therapeutics vs. Ikena Oncology | Design Therapeutics vs. Stoke 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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