Correlation Between Karyopharm Therapeutics and I Mab

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

By analyzing existing cross correlation between Karyopharm Therapeutics and I Mab, you can compare the effects of market volatilities on Karyopharm Therapeutics and I Mab 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 Karyopharm Therapeutics with a short position of I Mab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karyopharm Therapeutics and I Mab.

Diversification Opportunities for Karyopharm Therapeutics and I Mab

0.46

Correlation Coefficient

Karyopharm Therapeutics  I Mab

Very weak diversification

The 3 months correlation between Karyopharm and IMAB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Karyopharm Therapeutics and I Mab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Mab and Karyopharm Therapeutics 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 Karyopharm Therapeutics are associated (or correlated) with I Mab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Mab has no effect on the direction of Karyopharm Therapeutics i.e., Karyopharm Therapeutics and I Mab go up and down completely randomly.

Pair Corralation between Karyopharm Therapeutics and I Mab

Given the investment horizon of 90 days Karyopharm Therapeutics is expected to under-perform the I Mab. But the stock apears to be less risky and, when comparing its historical volatility, Karyopharm Therapeutics is 2.21 times less risky than I Mab. The stock trades about -1.04 of its potential returns per unit of risk. The I Mab is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  95.00  in I Mab on September 27, 2024 and sell it today you would lose (5.00) from holding I Mab or give up 5.26% of portfolio value over 90 days.

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

Karyopharm Therapeutics  vs.  I Mab

Karyopharm Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karyopharm Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

I Mab

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I Mab has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Karyopharm Therapeutics and I Mab

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

The idea behind Karyopharm Therapeutics and I Mab 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.