Correlation Between Verastem and Kymera Therapeutics
Can any of the company-specific risk be diversified away by investing in both Verastem 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 Verastem and Kymera Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and Kymera Therapeutics, you can compare the effects of market volatilities on Verastem 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 Verastem with a short position of Kymera Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and Kymera Therapeutics.
Diversification Opportunities for Verastem and Kymera Therapeutics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Verastem and Kymera is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Kymera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kymera Therapeutics 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 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 Verastem i.e., Verastem and Kymera Therapeutics go up and down completely randomly.
Pair Corralation between Verastem and Kymera Therapeutics
Given the investment horizon of 90 days Verastem is expected to generate 2.92 times more return on investment than Kymera Therapeutics. However, Verastem is 2.92 times more volatile than Kymera Therapeutics. It trades about 0.13 of its potential returns per unit of risk. Kymera Therapeutics is currently generating about 0.06 per unit of risk. If you would invest 444.00 in Verastem on October 20, 2024 and sell it today you would earn a total of 89.00 from holding Verastem or generate 20.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verastem vs. Kymera Therapeutics
Performance |
| Timeline |
| Verastem |
| Kymera Therapeutics |
Verastem and Kymera Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and Kymera Therapeutics
The main advantage of trading using opposite Verastem and Kymera Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem 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.The idea behind Verastem and Kymera Therapeutics 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.| Kymera Therapeutics vs. Foghorn Therapeutics | Kymera Therapeutics vs. Shattuck Labs | Kymera Therapeutics vs. Monte Rosa Therapeutics | Kymera Therapeutics vs. Nurix Therapeutics |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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