Correlation Between Khiron Life and American Green

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

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

Diversification Opportunities for Khiron Life and American Green

0.21

Correlation Coefficient

Khiron Life  American Green

Modest diversification

The 3 months correlation between Khiron and American is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Khiron Life Sciences and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green and Khiron 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 Khiron Life Sciences are associated (or correlated) with American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of Khiron Life i.e., Khiron Life and American Green go up and down completely randomly.

Pair Corralation between Khiron Life and American Green

Assuming the 90 days horizon Khiron Life Sciences is expected to generate 2.76 times more return on investment than American Green. However, Khiron Life is 2.76 times more volatile than American Green. It trades about 0.06 of its potential returns per unit of risk. American Green is currently generating about 0.07 per unit of risk. If you would invest  3.70  in Khiron Life Sciences on September 12, 2024 and sell it today you would lose (3.70) from holding Khiron Life Sciences or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Khiron Life Sciences  vs.  American Green

Khiron Life Sciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khiron Life Sciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Khiron Life reported solid returns over the last few months and may actually be approaching a breakup point.

American Green

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, American Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Khiron Life and American Green

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

The idea behind Khiron Life Sciences and American Green 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.