Correlation Between Kronos Bio and Nkarta

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

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

Diversification Opportunities for Kronos Bio and Nkarta

0.67

Correlation Coefficient

Kronos Bio  Nkarta

Poor diversification

The 3 months correlation between Kronos and Nkarta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and Nkarta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nkarta Inc 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 Nkarta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nkarta Inc has no effect on the direction of Kronos Bio i.e., Kronos Bio and Nkarta go up and down completely randomly.

Pair Corralation between Kronos Bio and Nkarta

Given the investment horizon of 90 days Kronos Bio is expected to under-perform the Nkarta. But the stock apears to be less risky and, when comparing its historical volatility, Kronos Bio is 3.23 times less risky than Nkarta. The stock trades about -0.11 of its potential returns per unit of risk. The Nkarta Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Nkarta Inc on December 28, 2024 and sell it today you would lose (35.00) from holding Nkarta Inc or give up 15.09% of portfolio value over 90 days.

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

Kronos Bio  vs.  Nkarta Inc

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.

Nkarta Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nkarta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nkarta is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kronos Bio and Nkarta

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

The idea behind Kronos Bio and Nkarta 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.