Correlation Between Krystal Biotech and Sana Biotechnology

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

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

Diversification Opportunities for Krystal Biotech and Sana Biotechnology

-0.21

Correlation Coefficient

Krystal Biotech  Sana Biotechnology

Very good diversification

The 3 months correlation between Krystal and Sana is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Sana Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sana Biotechnology 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 Sana Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sana Biotechnology has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Sana Biotechnology go up and down completely randomly.

Pair Corralation between Krystal Biotech and Sana Biotechnology

Given the investment horizon of 90 days Krystal Biotech is expected to generate 1.18 times less return on investment than Sana Biotechnology. But when comparing it to its historical volatility, Krystal Biotech is 2.71 times less risky than Sana Biotechnology. It trades about 0.06 of its potential returns per unit of risk. Sana Biotechnology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  328.00  in Sana Biotechnology on November 28, 2024 and sell it today you would lose (60.00) from holding Sana Biotechnology or give up 18.29% of portfolio value over 90 days.

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

Krystal Biotech  vs.  Sana Biotechnology

Krystal Biotech

Risk-Adjusted Performance

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.

Sana Biotechnology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sana Biotechnology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sana Biotechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Krystal Biotech and Sana Biotechnology

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

The idea behind Krystal Biotech and Sana Biotechnology 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..