Correlation Between Kodiak Sciences and Exagen

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

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

Diversification Opportunities for Kodiak Sciences and Exagen

0.72

Correlation Coefficient

Kodiak Sciences  Exagen

Poor diversification

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

Pair Corralation between Kodiak Sciences and Exagen

Considering the 90-day investment horizon Kodiak Sciences is expected to generate 1.38 times less return on investment than Exagen. In addition to that, Kodiak Sciences is 1.02 times more volatile than Exagen Inc. It trades about 0.05 of its total potential returns per unit of risk. Exagen Inc is currently generating about 0.08 per unit of volatility. If you would invest  195.00  in Exagen Inc on October 22, 2024 and sell it today you would earn a total of  204.00  from holding Exagen Inc or generate 104.62% return on investment over 90 days.

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

Kodiak Sciences  vs.  Exagen Inc

Kodiak Sciences

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 14 (%) 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.

Exagen Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exagen Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Exagen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kodiak Sciences and Exagen

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

The idea behind Kodiak Sciences and Exagen Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.