Correlation Between Kodiak Sciences and Plains All

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

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

Diversification Opportunities for Kodiak Sciences and Plains All

-0.72

Correlation Coefficient

Kodiak Sciences  Plains All

Pay attention - limited upside

The 3 months correlation between Kodiak and Plains is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Plains All American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains All American 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 Plains All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains All American has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and Plains All go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Plains All

Considering the 90-day investment horizon Kodiak Sciences is expected to under-perform the Plains All. In addition to that, Kodiak Sciences is 3.44 times more volatile than Plains All American. It trades about -0.31 of its total potential returns per unit of risk. Plains All American is currently generating about 0.2 per unit of volatility. If you would invest  1,647  in Plains All American on December 27, 2024 and sell it today you would earn a total of  362.00  from holding Plains All American or generate 21.98% return on investment over 90 days.

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

Kodiak Sciences  vs.  Plains All American

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.

Plains All American

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plains All American are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Plains All sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kodiak Sciences and Plains All

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

The idea behind Kodiak Sciences and Plains All American 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.