Correlation Between Cingulate Warrants and Kodiak Sciences

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

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

Diversification Opportunities for Cingulate Warrants and Kodiak Sciences

-0.7

Correlation Coefficient

Cingulate Warrants  Kodiak Sciences

Excellent diversification

The 3 months correlation between Cingulate and Kodiak is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cingulate Warrants and Kodiak Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Sciences and Cingulate Warrants 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 Cingulate Warrants are associated (or correlated) with Kodiak Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Sciences has no effect on the direction of Cingulate Warrants i.e., Cingulate Warrants and Kodiak Sciences go up and down completely randomly.

Pair Corralation between Cingulate Warrants and Kodiak Sciences

Assuming the 90 days horizon Cingulate Warrants is expected to generate 1.44 times less return on investment than Kodiak Sciences. In addition to that, Cingulate Warrants is 3.93 times more volatile than Kodiak Sciences. It trades about 0.07 of its total potential returns per unit of risk. Kodiak Sciences is currently generating about 0.42 per unit of volatility. If you would invest  242.00  in Kodiak Sciences on September 4, 2024 and sell it today you would earn a total of  485.00  from holding Kodiak Sciences or generate 200.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Cingulate Warrants  vs.  Kodiak Sciences

Cingulate Warrants

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate Warrants are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Cingulate Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Kodiak Sciences

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cingulate Warrants and Kodiak Sciences

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

The idea behind Cingulate Warrants and Kodiak 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.