Correlation Between Kodiak Sciences and Veltex

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

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

Diversification Opportunities for Kodiak Sciences and Veltex

-0.49

Correlation Coefficient

Kodiak Sciences  Veltex

Very good diversification

The 3 months correlation between Kodiak and Veltex is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Veltex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veltex 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 Veltex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veltex has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and Veltex go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Veltex

Considering the 90-day investment horizon Kodiak Sciences is expected to generate 0.55 times more return on investment than Veltex. However, Kodiak Sciences is 1.83 times less risky than Veltex. It trades about 0.04 of its potential returns per unit of risk. Veltex is currently generating about 0.02 per unit of risk. If you would invest  817.00  in Kodiak Sciences on October 5, 2024 and sell it today you would earn a total of  178.00  from holding Kodiak Sciences or generate 21.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.73%
Values	Daily Returns

Kodiak Sciences  vs.  Veltex

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.

Veltex

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kodiak Sciences and Veltex

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

The idea behind Kodiak Sciences and Veltex 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.