Correlation Between Zai Lab and ProKidney Corp
Can any of the company-specific risk be diversified away by investing in both Zai Lab and ProKidney Corp 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 Zai Lab and ProKidney Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zai Lab and ProKidney Corp, you can compare the effects of market volatilities on Zai Lab and ProKidney Corp 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 Zai Lab with a short position of ProKidney Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zai Lab and ProKidney Corp.
Diversification Opportunities for Zai Lab and ProKidney Corp
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zai and ProKidney is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Zai Lab and ProKidney Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProKidney Corp and Zai Lab 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 Zai Lab are associated (or correlated) with ProKidney Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProKidney Corp has no effect on the direction of Zai Lab i.e., Zai Lab and ProKidney Corp go up and down completely randomly.
Pair Corralation between Zai Lab and ProKidney Corp
Given the investment horizon of 90 days Zai Lab is expected to generate 0.9 times more return on investment than ProKidney Corp. However, Zai Lab is 1.11 times less risky than ProKidney Corp. It trades about 0.36 of its potential returns per unit of risk. ProKidney Corp is currently generating about -0.13 per unit of risk. If you would invest 2,684 in Zai Lab on November 27, 2024 and sell it today you would earn a total of 611.00 from holding Zai Lab or generate 22.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zai Lab vs. ProKidney Corp
Performance |
| Timeline |
| Zai Lab |
| ProKidney Corp |
Zai Lab and ProKidney Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zai Lab and ProKidney Corp
The main advantage of trading using opposite Zai Lab and ProKidney Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zai Lab position performs unexpectedly, ProKidney Corp 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 ProKidney Corp will offset losses from the drop in ProKidney Corp's long position.| Zai Lab vs. C4 Therapeutics | Zai Lab vs. Erasca Inc | Zai Lab vs. Cullinan Oncology LLC | Zai Lab vs. Legend Biotech Corp |
| ProKidney Corp vs. Relay Therapeutics | ProKidney Corp vs. Stoke Therapeutics | ProKidney Corp vs. Pliant Therapeutics | ProKidney Corp vs. Black Diamond 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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