Correlation Between Kronos Bio and AnaptysBio

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

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

Diversification Opportunities for Kronos Bio and AnaptysBio

0.25

Correlation Coefficient

Kronos Bio  AnaptysBio

Modest diversification

The 3 months correlation between Kronos and AnaptysBio is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and AnaptysBio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AnaptysBio and Kronos Bio 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 Kronos Bio are associated (or correlated) with AnaptysBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AnaptysBio has no effect on the direction of Kronos Bio i.e., Kronos Bio and AnaptysBio go up and down completely randomly.

Pair Corralation between Kronos Bio and AnaptysBio

Given the investment horizon of 90 days Kronos Bio is expected to generate 0.56 times more return on investment than AnaptysBio. However, Kronos Bio is 1.79 times less risky than AnaptysBio. It trades about 0.02 of its potential returns per unit of risk. AnaptysBio is currently generating about -0.15 per unit of risk. If you would invest  95.00  in Kronos Bio on September 19, 2024 and sell it today you would earn a total of  1.00  from holding Kronos Bio or generate 1.05% return on investment over 90 days.

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

Kronos Bio  vs.  AnaptysBio

Kronos Bio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Kronos Bio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

AnaptysBio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AnaptysBio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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 Kronos Bio and AnaptysBio

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

The idea behind Kronos Bio and AnaptysBio 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.