Correlation Between Revolution Medicines and Kymera Therapeutics
Can any of the company-specific risk be diversified away by investing in both Revolution Medicines and Kymera 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 Revolution Medicines and Kymera Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Revolution Medicines and Kymera Therapeutics, you can compare the effects of market volatilities on Revolution Medicines and Kymera 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 Revolution Medicines with a short position of Kymera Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolution Medicines and Kymera Therapeutics.
Diversification Opportunities for Revolution Medicines and Kymera Therapeutics
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Revolution and Kymera is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Medicines and Kymera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kymera Therapeutics and Revolution Medicines 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 Revolution Medicines are associated (or correlated) with Kymera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kymera Therapeutics has no effect on the direction of Revolution Medicines i.e., Revolution Medicines and Kymera Therapeutics go up and down completely randomly.
Pair Corralation between Revolution Medicines and Kymera Therapeutics
Given the investment horizon of 90 days Revolution Medicines is expected to generate 0.8 times more return on investment than Kymera Therapeutics. However, Revolution Medicines is 1.24 times less risky than Kymera Therapeutics. It trades about 0.23 of its potential returns per unit of risk. Kymera Therapeutics is currently generating about 0.07 per unit of risk. If you would invest 4,613 in Revolution Medicines on September 3, 2024 and sell it today you would earn a total of 1,172 from holding Revolution Medicines or generate 25.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Revolution Medicines vs. Kymera Therapeutics
Performance |
| Timeline |
| Revolution Medicines |
| Kymera Therapeutics |
Revolution Medicines and Kymera Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Revolution Medicines and Kymera Therapeutics
The main advantage of trading using opposite Revolution Medicines and Kymera Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolution Medicines position performs unexpectedly, Kymera 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 Kymera Therapeutics will offset losses from the drop in Kymera Therapeutics' long position.| Revolution Medicines vs. Blueprint Medicines Corp | Revolution Medicines vs. Sana Biotechnology | Revolution Medicines vs. Kymera Therapeutics | Revolution Medicines vs. Monte Rosa Therapeutics |
| Kymera Therapeutics vs. DiaMedica Therapeutics | Kymera Therapeutics vs. Lyra Therapeutics | Kymera Therapeutics vs. Centessa Pharmaceuticals PLC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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