Correlation Between Kronos Bio and Fortress Biotech

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

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

Diversification Opportunities for Kronos Bio and Fortress Biotech

0.15

Correlation Coefficient

Kronos Bio  Fortress Biotech

Average diversification

The 3 months correlation between Kronos and Fortress is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and Fortress Biotech Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech Pref 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 Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech Pref has no effect on the direction of Kronos Bio i.e., Kronos Bio and Fortress Biotech go up and down completely randomly.

Pair Corralation between Kronos Bio and Fortress Biotech

Given the investment horizon of 90 days Kronos Bio is expected to under-perform the Fortress Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Kronos Bio is 1.26 times less risky than Fortress Biotech. The stock trades about -0.1 of its potential returns per unit of risk. The Fortress Biotech Pref is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  675.00  in Fortress Biotech Pref on December 30, 2024 and sell it today you would lose (34.00) from holding Fortress Biotech Pref or give up 5.04% of portfolio value over 90 days.

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

Kronos Bio  vs.  Fortress Biotech Pref

Kronos Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kronos Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fortress Biotech Pref

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Biotech Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fortress Biotech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kronos Bio and Fortress Biotech

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

The idea behind Kronos Bio and Fortress Biotech Pref 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.