Correlation Between Nkarta and Edesa Biotech
Can any of the company-specific risk be diversified away by investing in both Nkarta and Edesa Biotech 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 Edesa Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nkarta Inc and Edesa Biotech, you can compare the effects of market volatilities on Nkarta and Edesa Biotech 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 Edesa Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nkarta and Edesa Biotech.
Diversification Opportunities for Nkarta and Edesa Biotech
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nkarta and Edesa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Edesa Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edesa Biotech 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 Edesa Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edesa Biotech has no effect on the direction of Nkarta i.e., Nkarta and Edesa Biotech go up and down completely randomly.
Pair Corralation between Nkarta and Edesa Biotech
Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Edesa Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Nkarta Inc is 1.7 times less risky than Edesa Biotech. The stock trades about -0.01 of its potential returns per unit of risk. The Edesa Biotech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 178.00 in Edesa Biotech on November 9, 2024 and sell it today you would earn a total of 17.00 from holding Edesa Biotech or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nkarta Inc vs. Edesa Biotech
Performance |
| Timeline |
| Nkarta Inc |
| Edesa Biotech |
Nkarta and Edesa Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nkarta and Edesa Biotech
The main advantage of trading using opposite Nkarta and Edesa Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nkarta position performs unexpectedly, Edesa Biotech 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 Edesa Biotech will offset losses from the drop in Edesa Biotech's long position.| Nkarta vs. Monte Rosa Therapeutics | Nkarta vs. Lyell Immunopharma | Nkarta vs. Generation Bio Co | Nkarta vs. Sana Biotechnology |
| Edesa Biotech vs. SAB Biotherapeutics | Edesa Biotech vs. Senti Biosciences | Edesa Biotech vs. Cingulate | Edesa Biotech vs. Indaptus 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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