Correlation Between Pfizer and Kronos Bio
Can any of the company-specific risk be diversified away by investing in both Pfizer and Kronos Bio 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 Pfizer and Kronos Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Kronos Bio, you can compare the effects of market volatilities on Pfizer and Kronos Bio 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 Pfizer with a short position of Kronos Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Kronos Bio.
Diversification Opportunities for Pfizer and Kronos Bio
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pfizer and Kronos is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Pfizer 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 Pfizer Inc are associated (or correlated) with Kronos Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Bio has no effect on the direction of Pfizer i.e., Pfizer and Kronos Bio go up and down completely randomly.
Pair Corralation between Pfizer and Kronos Bio
Considering the 90-day investment horizon Pfizer Inc is expected to generate 0.47 times more return on investment than Kronos Bio. However, Pfizer Inc is 2.11 times less risky than Kronos Bio. It trades about -0.22 of its potential returns per unit of risk. Kronos Bio is currently generating about -0.11 per unit of risk. If you would invest 2,842 in Pfizer Inc on August 28, 2024 and sell it today you would lose (225.00) from holding Pfizer Inc or give up 7.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Kronos Bio
Performance |
| Timeline |
| Pfizer Inc |
| Kronos Bio |
Pfizer and Kronos Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Kronos Bio
The main advantage of trading using opposite Pfizer and Kronos Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Kronos Bio 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 Kronos Bio will offset losses from the drop in Kronos Bio's long position.| Pfizer vs. Capricor Therapeutics | Pfizer vs. Soleno Therapeutics | Pfizer vs. Bio Path Holdings | Pfizer vs. Moleculin Biotech |
| Kronos Bio vs. Eliem Therapeutics | Kronos Bio vs. HCW Biologics | Kronos Bio vs. Scpharmaceuticals | Kronos Bio 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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