Correlation Between Krystal Biotech and Avax Techs

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

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

Diversification Opportunities for Krystal Biotech and Avax Techs

0.13

Correlation Coefficient

Krystal Biotech  Avax Techs

Average diversification

The 3 months correlation between Krystal and Avax is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Avax Techs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax Techs and Krystal Biotech 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 Krystal Biotech are associated (or correlated) with Avax Techs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax Techs has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Avax Techs go up and down completely randomly.

Pair Corralation between Krystal Biotech and Avax Techs

Given the investment horizon of 90 days Krystal Biotech is expected to generate 58.9 times less return on investment than Avax Techs. But when comparing it to its historical volatility, Krystal Biotech is 46.59 times less risky than Avax Techs. It trades about 0.1 of its potential returns per unit of risk. Avax Techs is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Avax Techs on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Avax Techs or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Krystal Biotech  vs.  Avax Techs

Krystal Biotech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krystal Biotech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Krystal Biotech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Avax Techs

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avax Techs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Avax Techs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Krystal Biotech and Avax Techs

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

The idea behind Krystal Biotech and Avax Techs 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.