Correlation Between Abbott Laboratories and Kuros Biosciences

Can any of the company-specific risk be diversified away by investing in both Abbott Laboratories and Kuros Biosciences 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 Abbott Laboratories and Kuros Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abbott Laboratories and Kuros Biosciences AG, you can compare the effects of market volatilities on Abbott Laboratories and Kuros Biosciences 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 Abbott Laboratories with a short position of Kuros Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Kuros Biosciences.

Diversification Opportunities for Abbott Laboratories and Kuros Biosciences

0.21

Correlation Coefficient

Abbott Laboratories  Kuros Biosciences

Modest diversification

The 3 months correlation between Abbott and Kuros is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Kuros Biosciences AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuros Biosciences and Abbott Laboratories 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 Abbott Laboratories are associated (or correlated) with Kuros Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuros Biosciences has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Kuros Biosciences go up and down completely randomly.

Pair Corralation between Abbott Laboratories and Kuros Biosciences

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.23 times more return on investment than Kuros Biosciences. However, Abbott Laboratories is 4.29 times less risky than Kuros Biosciences. It trades about 0.14 of its potential returns per unit of risk. Kuros Biosciences AG is currently generating about -0.06 per unit of risk. If you would invest  11,347  in Abbott Laboratories on October 26, 2024 and sell it today you would earn a total of  1,156  from holding Abbott Laboratories or generate 10.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Abbott Laboratories  vs.  Kuros Biosciences AG

Abbott Laboratories

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, Abbott Laboratories may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Kuros Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuros Biosciences AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Abbott Laboratories and Kuros Biosciences

The main advantage of trading using opposite Abbott Laboratories and Kuros Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbott Laboratories position performs unexpectedly, Kuros Biosciences 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 Kuros Biosciences will offset losses from the drop in Kuros Biosciences' long position.

The idea behind Abbott Laboratories and Kuros Biosciences AG 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.