Correlation Between CytomX Therapeutics and Kura Oncology

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

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

Diversification Opportunities for CytomX Therapeutics and Kura Oncology

0.74

Correlation Coefficient

CytomX Therapeutics  Kura Oncology

Poor diversification

The 3 months correlation between CytomX and Kura is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CytomX Therapeutics and Kura Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Oncology and CytomX Therapeutics 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 CytomX Therapeutics are associated (or correlated) with Kura Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Oncology has no effect on the direction of CytomX Therapeutics i.e., CytomX Therapeutics and Kura Oncology go up and down completely randomly.

Pair Corralation between CytomX Therapeutics and Kura Oncology

Given the investment horizon of 90 days CytomX Therapeutics is expected to generate 0.7 times more return on investment than Kura Oncology. However, CytomX Therapeutics is 1.43 times less risky than Kura Oncology. It trades about -0.02 of its potential returns per unit of risk. Kura Oncology is currently generating about -0.15 per unit of risk. If you would invest  112.00  in CytomX Therapeutics on August 31, 2024 and sell it today you would lose (10.00) from holding CytomX Therapeutics or give up 8.93% of portfolio value over 90 days.

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

CytomX Therapeutics  vs.  Kura Oncology

CytomX Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CytomX Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, CytomX Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Kura Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kura Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CytomX Therapeutics and Kura Oncology

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

The idea behind CytomX Therapeutics and Kura Oncology 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.