Correlation Between HAVN Life and Kane Biotech

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

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

Diversification Opportunities for HAVN Life and Kane Biotech

-0.62

Correlation Coefficient

HAVN Life  Kane Biotech

Excellent diversification

The 3 months correlation between HAVN and Kane is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding HAVN Life Sciences and Kane Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kane Biotech and HAVN Life 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 HAVN Life Sciences are associated (or correlated) with Kane Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kane Biotech has no effect on the direction of HAVN Life i.e., HAVN Life and Kane Biotech go up and down completely randomly.

Pair Corralation between HAVN Life and Kane Biotech

Assuming the 90 days horizon HAVN Life Sciences is expected to generate 13.35 times more return on investment than Kane Biotech. However, HAVN Life is 13.35 times more volatile than Kane Biotech. It trades about 0.1 of its potential returns per unit of risk. Kane Biotech is currently generating about 0.02 per unit of risk. If you would invest  5.20  in HAVN Life Sciences on October 12, 2024 and sell it today you would lose (5.10) from holding HAVN Life Sciences or give up 98.08% of portfolio value over 90 days.

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

HAVN Life Sciences  vs.  Kane Biotech

HAVN Life Sciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HAVN Life Sciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, HAVN Life reported solid returns over the last few months and may actually be approaching a breakup point.

Kane Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kane Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HAVN Life and Kane Biotech

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

The idea behind HAVN Life Sciences and Kane 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.