Correlation Between Fulcrum Therapeutics and Kezar Life

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

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

Diversification Opportunities for Fulcrum Therapeutics and Kezar Life

-0.72

Correlation Coefficient

Fulcrum Therapeutics  Kezar Life

Pay attention - limited upside

The 3 months correlation between Fulcrum and Kezar is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Therapeutics 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 Fulcrum 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 Fulcrum Therapeutics 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 Fulcrum Therapeutics i.e., Fulcrum Therapeutics and Kezar Life go up and down completely randomly.

Pair Corralation between Fulcrum Therapeutics and Kezar Life

Given the investment horizon of 90 days Fulcrum Therapeutics is expected to generate 1.71 times more return on investment than Kezar Life. However, Fulcrum Therapeutics is 1.71 times more volatile than Kezar Life Sciences. It trades about 0.11 of its potential returns per unit of risk. Kezar Life Sciences is currently generating about -0.11 per unit of risk. If you would invest  324.00  in Fulcrum Therapeutics on October 26, 2024 and sell it today you would earn a total of  91.00  from holding Fulcrum Therapeutics or generate 28.09% return on investment over 90 days.

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

Fulcrum Therapeutics  vs.  Kezar Life Sciences

Fulcrum Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fulcrum Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Fulcrum Therapeutics exhibited 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 Fulcrum Therapeutics and Kezar Life

The main advantage of trading using opposite Fulcrum Therapeutics and Kezar Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Therapeutics 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 Fulcrum Therapeutics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.