Correlation Between Burning Rock and Kymera Therapeutics

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

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

Diversification Opportunities for Burning Rock and Kymera Therapeutics

-0.62

Correlation Coefficient

Burning Rock  Kymera Therapeutics

Excellent diversification

The 3 months correlation between Burning and Kymera is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Kymera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kymera Therapeutics and Burning Rock 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 Burning Rock Biotech are associated (or correlated) with Kymera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kymera Therapeutics has no effect on the direction of Burning Rock i.e., Burning Rock and Kymera Therapeutics go up and down completely randomly.

Pair Corralation between Burning Rock and Kymera Therapeutics

Considering the 90-day investment horizon Burning Rock Biotech is expected to under-perform the Kymera Therapeutics. In addition to that, Burning Rock is 1.26 times more volatile than Kymera Therapeutics. It trades about -0.03 of its total potential returns per unit of risk. Kymera Therapeutics is currently generating about 0.03 per unit of volatility. If you would invest  3,454  in Kymera Therapeutics on October 4, 2024 and sell it today you would earn a total of  635.00  from holding Kymera Therapeutics or generate 18.38% return on investment over 90 days.

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

Burning Rock Biotech  vs.  Kymera Therapeutics

Burning Rock Biotech

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burning Rock Biotech are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Burning Rock reported solid returns over the last few months and may actually be approaching a breakup point.

Kymera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kymera Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Kymera Therapeutics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Burning Rock and Kymera Therapeutics

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

The idea behind Burning Rock Biotech and Kymera Therapeutics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.