Correlation Between Anavex Life and Kezar Life

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

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

Diversification Opportunities for Anavex Life and Kezar Life

-0.74

Correlation Coefficient

Anavex Life  Kezar Life

Pay attention - limited upside

The 3 months correlation between Anavex and Kezar is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Anavex Life Sciences 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 Anavex Life 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 Anavex Life Sciences 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 Anavex Life i.e., Anavex Life and Kezar Life go up and down completely randomly.

Pair Corralation between Anavex Life and Kezar Life

Given the investment horizon of 90 days Anavex Life Sciences is expected to under-perform the Kezar Life. In addition to that, Anavex Life is 3.02 times more volatile than Kezar Life Sciences. It trades about -0.09 of its total potential returns per unit of risk. Kezar Life Sciences is currently generating about -0.07 per unit of volatility. If you would invest  644.00  in Kezar Life Sciences on October 22, 2024 and sell it today you would lose (25.00) from holding Kezar Life Sciences or give up 3.88% of portfolio value over 90 days.

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

Anavex Life Sciences  vs.  Kezar Life Sciences

Anavex Life Sciences

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anavex Life Sciences are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Anavex Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kezar Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kezar Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Anavex Life and Kezar Life

The main advantage of trading using opposite Anavex Life and Kezar Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anavex Life 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 Anavex Life Sciences 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.