Correlation Between Opthea and Kezar Life
Can any of the company-specific risk be diversified away by investing in both Opthea and Kezar Life 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 Opthea and Kezar Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opthea and Kezar Life Sciences, you can compare the effects of market volatilities on Opthea and Kezar Life 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 Opthea with a short position of Kezar Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opthea and Kezar Life.
Diversification Opportunities for Opthea and Kezar Life
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Opthea and Kezar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Kezar Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kezar Life Sciences and Opthea 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 Opthea are associated (or correlated) with Kezar Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kezar Life Sciences has no effect on the direction of Opthea i.e., Opthea and Kezar Life go up and down completely randomly.
Pair Corralation between Opthea and Kezar Life
Considering the 90-day investment horizon Opthea is expected to generate 0.89 times more return on investment than Kezar Life. However, Opthea is 1.12 times less risky than Kezar Life. It trades about 0.08 of its potential returns per unit of risk. Kezar Life Sciences is currently generating about 0.03 per unit of risk. If you would invest 266.00 in Opthea on September 1, 2024 and sell it today you would earn a total of 103.00 from holding Opthea or generate 38.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.03% |
| Values | Daily Returns |
Opthea vs. Kezar Life Sciences
Performance |
| Timeline |
| Opthea |
| Kezar Life Sciences |
Opthea and Kezar Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opthea and Kezar Life
The main advantage of trading using opposite Opthea and Kezar Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opthea position performs unexpectedly, Kezar Life 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 Kezar Life will offset losses from the drop in Kezar Life's long position.| Opthea vs. Molecular Partners AG | Opthea vs. MediciNova | Opthea vs. Anebulo Pharmaceuticals | Opthea vs. Champions Oncology |
| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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