Correlation Between Halozyme Therapeutics and Krystal Biotech

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

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

Diversification Opportunities for Halozyme Therapeutics and Krystal Biotech

-0.16

Correlation Coefficient

Halozyme Therapeutics  Krystal Biotech

Good diversification

The 3 months correlation between Halozyme and Krystal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Halozyme Therapeutics and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and Halozyme 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 Halozyme Therapeutics 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 Halozyme Therapeutics i.e., Halozyme Therapeutics and Krystal Biotech go up and down completely randomly.

Pair Corralation between Halozyme Therapeutics and Krystal Biotech

Given the investment horizon of 90 days Halozyme Therapeutics is expected to generate 0.48 times more return on investment than Krystal Biotech. However, Halozyme Therapeutics is 2.07 times less risky than Krystal Biotech. It trades about 0.23 of its potential returns per unit of risk. Krystal Biotech is currently generating about -0.03 per unit of risk. If you would invest  4,859  in Halozyme Therapeutics on December 2, 2024 and sell it today you would earn a total of  1,056  from holding Halozyme Therapeutics or generate 21.73% return on investment over 90 days.

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

Halozyme Therapeutics  vs.  Krystal Biotech

Halozyme Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Halozyme Therapeutics are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Halozyme Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Krystal Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Krystal Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Krystal Biotech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Halozyme Therapeutics and Krystal Biotech

The main advantage of trading using opposite Halozyme Therapeutics and Krystal Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halozyme Therapeutics 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 Halozyme Therapeutics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.