Correlation Between Assembly Biosciences and Kezar Life

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

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

Diversification Opportunities for Assembly Biosciences and Kezar Life

-0.13

Correlation Coefficient

Assembly Biosciences  Kezar Life

Good diversification

The 3 months correlation between Assembly and Kezar is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Assembly Biosciences and Kezar Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kezar Life Sciences and Assembly Biosciences 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 Assembly Biosciences are associated (or correlated) with Kezar Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kezar Life Sciences has no effect on the direction of Assembly Biosciences i.e., Assembly Biosciences and Kezar Life go up and down completely randomly.

Pair Corralation between Assembly Biosciences and Kezar Life

Given the investment horizon of 90 days Assembly Biosciences is expected to under-perform the Kezar Life. But the stock apears to be less risky and, when comparing its historical volatility, Assembly Biosciences is 1.48 times less risky than Kezar Life. The stock trades about -0.04 of its potential returns per unit of risk. The Kezar Life Sciences is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Kezar Life Sciences on September 17, 2024 and sell it today you would earn a total of  100.00  from holding Kezar Life Sciences or generate 17.39% return on investment over 90 days.

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

Assembly Biosciences  vs.  Kezar Life Sciences

Assembly Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assembly Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Kezar Life Sciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kezar Life Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Kezar Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Assembly Biosciences and Kezar Life

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

The idea behind Assembly Biosciences and Kezar Life Sciences 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.