Correlation Between Enveric Biosciences and Krystal Biotech

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

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

Diversification Opportunities for Enveric Biosciences and Krystal Biotech

-0.64

Correlation Coefficient

Enveric Biosciences  Krystal Biotech

Excellent diversification

The 3 months correlation between Enveric and Krystal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Enveric Biosciences and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and Enveric Biosciences 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 Enveric Biosciences are associated (or correlated) with Krystal Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krystal Biotech has no effect on the direction of Enveric Biosciences i.e., Enveric Biosciences and Krystal Biotech go up and down completely randomly.

Pair Corralation between Enveric Biosciences and Krystal Biotech

Given the investment horizon of 90 days Enveric Biosciences is expected to under-perform the Krystal Biotech. In addition to that, Enveric Biosciences is 5.81 times more volatile than Krystal Biotech. It trades about -0.06 of its total potential returns per unit of risk. Krystal Biotech is currently generating about 0.1 per unit of volatility. If you would invest  15,980  in Krystal Biotech on December 29, 2024 and sell it today you would earn a total of  2,412  from holding Krystal Biotech or generate 15.09% return on investment over 90 days.

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

Enveric Biosciences  vs.  Krystal Biotech

Enveric Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enveric Biosciences 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Krystal Biotech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krystal Biotech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Krystal Biotech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enveric Biosciences and Krystal Biotech

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

The idea behind Enveric Biosciences and Krystal Biotech 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.