Correlation Between Generation Bio and Kronos Bio

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

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

Diversification Opportunities for Generation Bio and Kronos Bio

-0.53

Correlation Coefficient

Generation Bio  Kronos Bio

Excellent diversification

The 3 months correlation between Generation and Kronos is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Generation Bio Co and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Generation Bio 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 Generation Bio Co are associated (or correlated) with Kronos Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Bio has no effect on the direction of Generation Bio i.e., Generation Bio and Kronos Bio go up and down completely randomly.

Pair Corralation between Generation Bio and Kronos Bio

Given the investment horizon of 90 days Generation Bio Co is expected to under-perform the Kronos Bio. In addition to that, Generation Bio is 1.36 times more volatile than Kronos Bio. It trades about -0.03 of its total potential returns per unit of risk. Kronos Bio is currently generating about 0.01 per unit of volatility. If you would invest  129.00  in Kronos Bio on November 27, 2024 and sell it today you would lose (31.00) from holding Kronos Bio or give up 24.03% of portfolio value over 90 days.

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

Generation Bio Co  vs.  Kronos Bio

Generation Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Generation Bio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kronos Bio

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Bio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Kronos Bio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Generation Bio and Kronos Bio

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

The idea behind Generation Bio Co and Kronos Bio 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.