Correlation Between Nkarta and Lyra Therapeutics
Can any of the company-specific risk be diversified away by investing in both Nkarta and Lyra 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 Lyra 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 Lyra Therapeutics, you can compare the effects of market volatilities on Nkarta and Lyra 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 Lyra Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nkarta and Lyra Therapeutics.
Diversification Opportunities for Nkarta and Lyra Therapeutics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nkarta and Lyra is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Lyra Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyra 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 Lyra Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyra Therapeutics has no effect on the direction of Nkarta i.e., Nkarta and Lyra Therapeutics go up and down completely randomly.
Pair Corralation between Nkarta and Lyra Therapeutics
Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Lyra Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Nkarta Inc is 2.05 times less risky than Lyra Therapeutics. The stock trades about -0.3 of its potential returns per unit of risk. The Lyra Therapeutics is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Lyra Therapeutics on August 28, 2024 and sell it today you would lose (6.00) from holding Lyra Therapeutics or give up 24.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nkarta Inc vs. Lyra Therapeutics
Performance |
| Timeline |
| Nkarta Inc |
| Lyra Therapeutics |
Nkarta and Lyra Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nkarta and Lyra Therapeutics
The main advantage of trading using opposite Nkarta and Lyra Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nkarta position performs unexpectedly, Lyra 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 Lyra Therapeutics will offset losses from the drop in Lyra Therapeutics' long position.| Nkarta vs. Eliem Therapeutics | Nkarta vs. HCW Biologics | Nkarta vs. Scpharmaceuticals | Nkarta vs. Milestone Pharmaceuticals |
| Lyra Therapeutics vs. Eliem Therapeutics | Lyra Therapeutics vs. HCW Biologics | Lyra Therapeutics vs. Scpharmaceuticals | Lyra Therapeutics vs. Milestone Pharmaceuticals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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