Correlation Between Adagene and Kronos Bio

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

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

Diversification Opportunities for Adagene and Kronos Bio

-0.02

Correlation Coefficient

Adagene  Kronos Bio

Good diversification

The 3 months correlation between Adagene and Kronos is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Adagene 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 Adagene 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 Adagene i.e., Adagene and Kronos Bio go up and down completely randomly.

Pair Corralation between Adagene and Kronos Bio

Given the investment horizon of 90 days Adagene is expected to under-perform the Kronos Bio. In addition to that, Adagene is 1.33 times more volatile than Kronos Bio. It trades about -0.02 of its total potential returns per unit of risk. Kronos Bio is currently generating about 0.0 per unit of volatility. If you would invest  108.00  in Kronos Bio on September 19, 2024 and sell it today you would lose (12.00) from holding Kronos Bio or give up 11.11% of portfolio value over 90 days.

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

Adagene  vs.  Kronos Bio

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Kronos Bio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Adagene and Kronos Bio

The main advantage of trading using opposite Adagene and Kronos Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adagene 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 Adagene 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.