Correlation Between Achilles Therapeutics and Kronos Bio

Can any of the company-specific risk be diversified away by investing in both Achilles Therapeutics and Kronos Bio 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 Achilles Therapeutics and Kronos Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Achilles Therapeutics PLC and Kronos Bio, you can compare the effects of market volatilities on Achilles Therapeutics and Kronos Bio 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 Achilles Therapeutics with a short position of Kronos Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Achilles Therapeutics and Kronos Bio.

Diversification Opportunities for Achilles Therapeutics and Kronos Bio

-0.42

Correlation Coefficient

Achilles Therapeutics  Kronos Bio

Very good diversification

The 3 months correlation between Achilles and Kronos is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Achilles Therapeutics PLC and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Achilles Therapeutics 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 Achilles Therapeutics PLC are associated (or correlated) with Kronos Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Bio has no effect on the direction of Achilles Therapeutics i.e., Achilles Therapeutics and Kronos Bio go up and down completely randomly.

Pair Corralation between Achilles Therapeutics and Kronos Bio

Given the investment horizon of 90 days Achilles Therapeutics PLC is expected to generate 1.3 times more return on investment than Kronos Bio. However, Achilles Therapeutics is 1.3 times more volatile than Kronos Bio. It trades about 0.16 of its potential returns per unit of risk. Kronos Bio is currently generating about -0.01 per unit of risk. If you would invest  71.00  in Achilles Therapeutics PLC on September 2, 2024 and sell it today you would earn a total of  37.00  from holding Achilles Therapeutics PLC or generate 52.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Achilles Therapeutics PLC  vs.  Kronos Bio

Achilles Therapeutics PLC

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Achilles Therapeutics PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical indicators, Achilles Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kronos Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kronos Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kronos Bio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Achilles Therapeutics and Kronos Bio

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

The idea behind Achilles Therapeutics PLC and Kronos Bio 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..