Correlation Between Kronos Bio and Shattuck Labs

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

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

Diversification Opportunities for Kronos Bio and Shattuck Labs

0.24

Correlation Coefficient

Kronos Bio  Shattuck Labs

Modest diversification

The 3 months correlation between Kronos and Shattuck is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and Shattuck Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shattuck Labs 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 Shattuck Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shattuck Labs has no effect on the direction of Kronos Bio i.e., Kronos Bio and Shattuck Labs go up and down completely randomly.

Pair Corralation between Kronos Bio and Shattuck Labs

Given the investment horizon of 90 days Kronos Bio is expected to generate 0.45 times more return on investment than Shattuck Labs. However, Kronos Bio is 2.25 times less risky than Shattuck Labs. It trades about 0.03 of its potential returns per unit of risk. Shattuck Labs is currently generating about -0.16 per unit of risk. If you would invest  94.00  in Kronos Bio on September 17, 2024 and sell it today you would earn a total of  1.82  from holding Kronos Bio or generate 1.94% 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.  Shattuck Labs

Kronos Bio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Bio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Kronos Bio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Shattuck Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shattuck Labs 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 quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kronos Bio and Shattuck Labs

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

The idea behind Kronos Bio and Shattuck Labs 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.