Correlation Between Kaleido Biosciences and Covalon Technologies

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

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

Diversification Opportunities for Kaleido Biosciences and Covalon Technologies

0.0

Correlation Coefficient

Kaleido Biosciences  Covalon Technologies

Pay attention - limited upside

The 3 months correlation between Kaleido and Covalon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kaleido Biosciences and Covalon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covalon Technologies 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 Covalon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covalon Technologies has no effect on the direction of Kaleido Biosciences i.e., Kaleido Biosciences and Covalon Technologies go up and down completely randomly.

Pair Corralation between Kaleido Biosciences and Covalon Technologies

If you would invest (100.00) in Kaleido Biosciences on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Kaleido Biosciences or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kaleido Biosciences  vs.  Covalon Technologies

Kaleido Biosciences

Risk-Adjusted Performance

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.

Covalon Technologies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kaleido Biosciences and Covalon Technologies

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

The idea behind Kaleido Biosciences and Covalon Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.