Correlation Between Verastem and Kura Oncology
Can any of the company-specific risk be diversified away by investing in both Verastem and Kura Oncology 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 Verastem and Kura Oncology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and Kura Oncology, you can compare the effects of market volatilities on Verastem and Kura Oncology 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 Verastem with a short position of Kura Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and Kura Oncology.
Diversification Opportunities for Verastem and Kura Oncology
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Verastem and Kura is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Kura Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Oncology and Verastem 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 Verastem are associated (or correlated) with Kura Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Oncology has no effect on the direction of Verastem i.e., Verastem and Kura Oncology go up and down completely randomly.
Pair Corralation between Verastem and Kura Oncology
Given the investment horizon of 90 days Verastem is expected to generate 1.47 times more return on investment than Kura Oncology. However, Verastem is 1.47 times more volatile than Kura Oncology. It trades about -0.03 of its potential returns per unit of risk. Kura Oncology is currently generating about -0.12 per unit of risk. If you would invest 649.00 in Verastem on November 2, 2024 and sell it today you would lose (27.00) from holding Verastem or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verastem vs. Kura Oncology
Performance |
| Timeline |
| Verastem |
| Kura Oncology |
Verastem and Kura Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and Kura Oncology
The main advantage of trading using opposite Verastem and Kura Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem position performs unexpectedly, Kura Oncology 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 Kura Oncology will offset losses from the drop in Kura Oncology's long position.The idea behind Verastem and Kura Oncology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kura Oncology vs. Protagonist Therapeutics | Kura Oncology vs. Merus BV | Kura Oncology vs. Replimune Group | Kura Oncology vs. Kalvista 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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