Correlation Between Keros Therapeutics and Adhera Therapeutics

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

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

Diversification Opportunities for Keros Therapeutics and Adhera Therapeutics

0.26

Correlation Coefficient

Keros Therapeutics  Adhera Therapeutics

Modest diversification

The 3 months correlation between Keros and Adhera is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Keros Therapeutics and Adhera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adhera Therapeutics and Keros Therapeutics 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 Keros Therapeutics are associated (or correlated) with Adhera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adhera Therapeutics has no effect on the direction of Keros Therapeutics i.e., Keros Therapeutics and Adhera Therapeutics go up and down completely randomly.

Pair Corralation between Keros Therapeutics and Adhera Therapeutics

Given the investment horizon of 90 days Keros Therapeutics is expected to under-perform the Adhera Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Keros Therapeutics is 3.51 times less risky than Adhera Therapeutics. The stock trades about -0.01 of its potential returns per unit of risk. The Adhera Therapeutics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Adhera Therapeutics on October 7, 2024 and sell it today you would earn a total of  8.00  from holding Adhera Therapeutics or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	3.63%
Values	Daily Returns

Keros Therapeutics  vs.  Adhera Therapeutics

Keros Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keros Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Adhera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Keros Therapeutics and Adhera Therapeutics

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

The idea behind Keros Therapeutics and Adhera Therapeutics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.