Correlation Between Kodiak Sciences and 23291KAH8

Can any of the company-specific risk be diversified away by investing in both Kodiak Sciences and 23291KAH8 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 23291KAH8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kodiak Sciences and DH EUROPE FINANCE, you can compare the effects of market volatilities on Kodiak Sciences and 23291KAH8 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 23291KAH8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Sciences and 23291KAH8.

Diversification Opportunities for Kodiak Sciences and 23291KAH8

-0.64

Correlation Coefficient

Kodiak Sciences  23291KAH8

Excellent diversification

The 3 months correlation between Kodiak and 23291KAH8 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and DH EUROPE FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DH EUROPE FINANCE 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 23291KAH8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DH EUROPE FINANCE has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and 23291KAH8 go up and down completely randomly.

Pair Corralation between Kodiak Sciences and 23291KAH8

Considering the 90-day investment horizon Kodiak Sciences is expected to generate 7.65 times less return on investment than 23291KAH8. But when comparing it to its historical volatility, Kodiak Sciences is 7.13 times less risky than 23291KAH8. It trades about 0.04 of its potential returns per unit of risk. DH EUROPE FINANCE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,814  in DH EUROPE FINANCE on October 5, 2024 and sell it today you would earn a total of  88.00  from holding DH EUROPE FINANCE or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.33%
Values	Daily Returns

Kodiak Sciences  vs.  DH EUROPE FINANCE

Kodiak Sciences

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

DH EUROPE FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DH EUROPE FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 23291KAH8 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kodiak Sciences and 23291KAH8

The main advantage of trading using opposite Kodiak Sciences and 23291KAH8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Sciences position performs unexpectedly, 23291KAH8 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 23291KAH8 will offset losses from the drop in 23291KAH8's long position.

The idea behind Kodiak Sciences and DH EUROPE FINANCE 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..