Correlation Between Alpha Tau and Kezar Life

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

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

Diversification Opportunities for Alpha Tau and Kezar Life

-0.83

Correlation Coefficient

Alpha Tau  Kezar Life

Pay attention - limited upside

The 3 months correlation between Alpha and Kezar is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical 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 Alpha Tau 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 Alpha Tau Medical 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 Alpha Tau i.e., Alpha Tau and Kezar Life go up and down completely randomly.

Pair Corralation between Alpha Tau and Kezar Life

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 0.81 times more return on investment than Kezar Life. However, Alpha Tau Medical is 1.24 times less risky than Kezar Life. It trades about 0.05 of its potential returns per unit of risk. Kezar Life Sciences is currently generating about 0.0 per unit of risk. If you would invest  301.00  in Alpha Tau Medical on October 19, 2024 and sell it today you would earn a total of  89.00  from holding Alpha Tau Medical or generate 29.57% return on investment over 90 days.

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

Alpha Tau Medical  vs.  Kezar Life Sciences

Alpha Tau Medical

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Tau Medical are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alpha Tau unveiled 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 Alpha Tau and Kezar Life

The main advantage of trading using opposite Alpha Tau and Kezar Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Tau 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 Alpha Tau Medical 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.