Correlation Between Kronos Bio and Rain Enhancement

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

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

Diversification Opportunities for Kronos Bio and Rain Enhancement

0.51

Correlation Coefficient

Kronos Bio  Rain Enhancement

Very weak diversification

The 3 months correlation between Kronos and Rain is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and Rain Enhancement Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rain Enhancement Tec 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 Rain Enhancement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rain Enhancement Tec has no effect on the direction of Kronos Bio i.e., Kronos Bio and Rain Enhancement go up and down completely randomly.

Pair Corralation between Kronos Bio and Rain Enhancement

Given the investment horizon of 90 days Kronos Bio is expected to generate 0.19 times more return on investment than Rain Enhancement. However, Kronos Bio is 5.14 times less risky than Rain Enhancement. It trades about -0.04 of its potential returns per unit of risk. Rain Enhancement Technologies is currently generating about -0.15 per unit of risk. If you would invest  92.00  in Kronos Bio on December 26, 2024 and sell it today you would lose (5.81) from holding Kronos Bio or give up 6.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

Kronos Bio  vs.  Rain Enhancement Technologies

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 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.

Rain Enhancement Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rain Enhancement Technologies 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 forward 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.

Pair Trading with Kronos Bio and Rain Enhancement

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

The idea behind Kronos Bio and Rain Enhancement Technologies 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.