Correlation Between Kodiak Sciences and Barry Callebaut

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

By analyzing existing cross correlation between Kodiak Sciences and Barry Callebaut AG, you can compare the effects of market volatilities on Kodiak Sciences and Barry Callebaut 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 Barry Callebaut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Sciences and Barry Callebaut.

Diversification Opportunities for Kodiak Sciences and Barry Callebaut

-0.44

Correlation Coefficient

Kodiak Sciences  Barry Callebaut

Very good diversification

The 3 months correlation between Kodiak and Barry is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Barry Callebaut AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barry Callebaut AG 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 Barry Callebaut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barry Callebaut AG has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and Barry Callebaut go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Barry Callebaut

Considering the 90-day investment horizon Kodiak Sciences is expected to under-perform the Barry Callebaut. In addition to that, Kodiak Sciences is 2.97 times more volatile than Barry Callebaut AG. It trades about -0.16 of its total potential returns per unit of risk. Barry Callebaut AG is currently generating about -0.34 per unit of volatility. If you would invest  134,069  in Barry Callebaut AG on October 27, 2024 and sell it today you would lose (22,069) from holding Barry Callebaut AG or give up 16.46% of portfolio value over 90 days.

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

Kodiak Sciences  vs.  Barry Callebaut AG

Kodiak Sciences

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 16 (%) 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.

Barry Callebaut AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kodiak Sciences and Barry Callebaut

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

The idea behind Kodiak Sciences and Barry Callebaut AG 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.