Correlation Between Kodiak Sciences and GMéxico Transportes

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

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

Diversification Opportunities for Kodiak Sciences and GMéxico Transportes

-0.28

Correlation Coefficient

Kodiak Sciences  GMéxico Transportes

Very good diversification

The 3 months correlation between Kodiak and GMéxico is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB 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 GMéxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and GMéxico Transportes go up and down completely randomly.

Pair Corralation between Kodiak Sciences and GMéxico Transportes

Considering the 90-day investment horizon Kodiak Sciences is expected to under-perform the GMéxico Transportes. In addition to that, Kodiak Sciences is 4.84 times more volatile than GMxico Transportes SAB. It trades about -0.24 of its total potential returns per unit of risk. GMxico Transportes SAB is currently generating about 0.06 per unit of volatility. If you would invest  160.00  in GMxico Transportes SAB on December 19, 2024 and sell it today you would earn a total of  7.00  from holding GMxico Transportes SAB or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Kodiak Sciences  vs.  GMxico Transportes SAB

Kodiak Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kodiak Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GMxico Transportes SAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMxico Transportes SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GMéxico Transportes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kodiak Sciences and GMéxico Transportes

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

The idea behind Kodiak Sciences and GMxico Transportes SAB 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 Stocks Directory module to find actively traded stocks across global markets.