Correlation Between Kodiak Sciences and Britvic PLC

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

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

Diversification Opportunities for Kodiak Sciences and Britvic PLC

-0.03

Correlation Coefficient

Kodiak Sciences  Britvic PLC

Good diversification

The 3 months correlation between Kodiak and Britvic is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Britvic PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britvic PLC ADR and Kodiak Sciences 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 Kodiak Sciences are associated (or correlated) with Britvic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britvic PLC ADR has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and Britvic PLC go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Britvic PLC

Considering the 90-day investment horizon Kodiak Sciences is expected to generate 9.02 times more return on investment than Britvic PLC. However, Kodiak Sciences is 9.02 times more volatile than Britvic PLC ADR. It trades about 0.19 of its potential returns per unit of risk. Britvic PLC ADR is currently generating about -0.1 per unit of risk. If you would invest  367.00  in Kodiak Sciences on October 21, 2024 and sell it today you would earn a total of  350.00  from holding Kodiak Sciences or generate 95.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kodiak Sciences  vs.  Britvic PLC ADR

Kodiak Sciences

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Britvic PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Britvic PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Britvic PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kodiak Sciences and Britvic PLC

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

The idea behind Kodiak Sciences and Britvic PLC ADR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.