Correlation Between ChitogenX and Kaleido Biosciences

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

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

Diversification Opportunities for ChitogenX and Kaleido Biosciences

0.55

Correlation Coefficient

ChitogenX  Kaleido Biosciences

Very weak diversification

The 3 months correlation between ChitogenX and Kaleido is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ChitogenX and Kaleido Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaleido Biosciences and ChitogenX 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 ChitogenX are associated (or correlated) with Kaleido Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaleido Biosciences has no effect on the direction of ChitogenX i.e., ChitogenX and Kaleido Biosciences go up and down completely randomly.

Pair Corralation between ChitogenX and Kaleido Biosciences

If you would invest  1.00  in Kaleido Biosciences on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Kaleido Biosciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

ChitogenX  vs.  Kaleido Biosciences

ChitogenX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChitogenX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kaleido Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ChitogenX and Kaleido Biosciences

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

The idea behind ChitogenX and Kaleido Biosciences 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.