Correlation Between Khiron Life and Filament Health

Can any of the company-specific risk be diversified away by investing in both Khiron Life and Filament Health 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 Filament Health 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 Filament Health Corp, you can compare the effects of market volatilities on Khiron Life and Filament Health 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 Filament Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khiron Life and Filament Health.

Diversification Opportunities for Khiron Life and Filament Health

-0.07

Correlation Coefficient

Khiron Life  Filament Health

Good diversification

The 3 months correlation between Khiron and Filament is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Khiron Life Sciences and Filament Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filament Health Corp 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 Filament Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filament Health Corp has no effect on the direction of Khiron Life i.e., Khiron Life and Filament Health go up and down completely randomly.

Pair Corralation between Khiron Life and Filament Health

Assuming the 90 days horizon Khiron Life Sciences is expected to generate 10.24 times more return on investment than Filament Health. However, Khiron Life is 10.24 times more volatile than Filament Health Corp. It trades about 0.16 of its potential returns per unit of risk. Filament Health Corp is currently generating about 0.04 per unit of risk. If you would invest  0.01  in Khiron Life Sciences on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Khiron Life Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Khiron Life Sciences  vs.  Filament Health Corp

Khiron Life Sciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khiron Life Sciences are ranked lower than 12 (%) 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.

Filament Health Corp

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Filament Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Filament Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Khiron Life and Filament Health

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

The idea behind Khiron Life Sciences and Filament Health Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.