Correlation Between Kineta and Algernon Pharmaceuticals

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

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

Diversification Opportunities for Kineta and Algernon Pharmaceuticals

0.29

Correlation Coefficient

Kineta  Algernon Pharmaceuticals

Modest diversification

The 3 months correlation between Kineta and Algernon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kineta Inc and Algernon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algernon Pharmaceuticals and Kineta 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 Kineta Inc are associated (or correlated) with Algernon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algernon Pharmaceuticals has no effect on the direction of Kineta i.e., Kineta and Algernon Pharmaceuticals go up and down completely randomly.

Pair Corralation between Kineta and Algernon Pharmaceuticals

Allowing for the 90-day total investment horizon Kineta Inc is expected to under-perform the Algernon Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Kineta Inc is 1.18 times less risky than Algernon Pharmaceuticals. The stock trades about -0.02 of its potential returns per unit of risk. The Algernon Pharmaceuticals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Algernon Pharmaceuticals on September 23, 2024 and sell it today you would lose (30.86) from holding Algernon Pharmaceuticals or give up 88.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.39%
Values	Daily Returns

Kineta Inc  vs.  Algernon Pharmaceuticals

Kineta Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kineta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Algernon Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Algernon Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Algernon Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kineta and Algernon Pharmaceuticals

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

The idea behind Kineta Inc and Algernon Pharmaceuticals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.