Correlation Between ProKidney Corp and Zai Lab
Can any of the company-specific risk be diversified away by investing in both ProKidney Corp and Zai Lab 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 ProKidney Corp and Zai Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProKidney Corp and Zai Lab, you can compare the effects of market volatilities on ProKidney Corp and Zai Lab 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 ProKidney Corp with a short position of Zai Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProKidney Corp and Zai Lab.
Diversification Opportunities for ProKidney Corp and Zai Lab
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProKidney and Zai is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ProKidney Corp and Zai Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zai Lab and ProKidney Corp 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 ProKidney Corp are associated (or correlated) with Zai Lab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zai Lab has no effect on the direction of ProKidney Corp i.e., ProKidney Corp and Zai Lab go up and down completely randomly.
Pair Corralation between ProKidney Corp and Zai Lab
Given the investment horizon of 90 days ProKidney Corp is expected to under-perform the Zai Lab. In addition to that, ProKidney Corp is 1.85 times more volatile than Zai Lab. It trades about -0.02 of its total potential returns per unit of risk. Zai Lab is currently generating about 0.0 per unit of volatility. If you would invest 3,962 in Zai Lab on September 1, 2024 and sell it today you would lose (1,077) from holding Zai Lab or give up 27.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProKidney Corp vs. Zai Lab
Performance |
| Timeline |
| ProKidney Corp |
| Zai Lab |
ProKidney Corp and Zai Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProKidney Corp and Zai Lab
The main advantage of trading using opposite ProKidney Corp and Zai Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProKidney Corp position performs unexpectedly, Zai Lab 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 Zai Lab will offset losses from the drop in Zai Lab's long position.| ProKidney Corp vs. Relay Therapeutics | ProKidney Corp vs. Stoke Therapeutics | ProKidney Corp vs. Pliant Therapeutics | ProKidney Corp vs. Black Diamond Therapeutics |
| Zai Lab vs. C4 Therapeutics | Zai Lab vs. Erasca Inc | Zai Lab vs. Cullinan Oncology LLC | Zai Lab vs. Legend Biotech Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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