Correlation Between Kaleido Biosciences and Biotron

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

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

Diversification Opportunities for Kaleido Biosciences and Biotron

-0.67

Correlation Coefficient

Kaleido Biosciences  Biotron

Excellent diversification

The 3 months correlation between Kaleido and Biotron is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kaleido Biosciences and Biotron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotron Limited and Kaleido Biosciences 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 Kaleido Biosciences are associated (or correlated) with Biotron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotron Limited has no effect on the direction of Kaleido Biosciences i.e., Kaleido Biosciences and Biotron go up and down completely randomly.

Pair Corralation between Kaleido Biosciences and Biotron

If you would invest  1.11  in Biotron Limited on September 12, 2024 and sell it today you would lose (0.01) from holding Biotron Limited or give up 0.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Kaleido Biosciences  vs.  Biotron Limited

Kaleido Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaleido Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Kaleido Biosciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Biotron Limited

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Kaleido Biosciences and Biotron

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

The idea behind Kaleido Biosciences and Biotron Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.