Correlation Between Krystal Biotech and Inhibrx

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

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

Diversification Opportunities for Krystal Biotech and Inhibrx

0.19

Correlation Coefficient

Krystal Biotech  Inhibrx

Average diversification

The 3 months correlation between Krystal and Inhibrx is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Inhibrx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibrx 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 Inhibrx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibrx has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Inhibrx go up and down completely randomly.

Pair Corralation between Krystal Biotech and Inhibrx

Given the investment horizon of 90 days Krystal Biotech is expected to generate 0.75 times more return on investment than Inhibrx. However, Krystal Biotech is 1.33 times less risky than Inhibrx. It trades about 0.04 of its potential returns per unit of risk. Inhibrx is currently generating about -0.03 per unit of risk. If you would invest  12,695  in Krystal Biotech on October 9, 2024 and sell it today you would earn a total of  3,280  from holding Krystal Biotech or generate 25.84% return on investment over 90 days.

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

Krystal Biotech  vs.  Inhibrx

Krystal Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krystal Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Inhibrx

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inhibrx are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Inhibrx may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Krystal Biotech and Inhibrx

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

The idea behind Krystal Biotech and Inhibrx 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.