Correlation Between Krystal Biotech and Exicure

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

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

Diversification Opportunities for Krystal Biotech and Exicure

0.04

Correlation Coefficient

Krystal Biotech  Exicure

Significant diversification

The 3 months correlation between Krystal and Exicure is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Exicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exicure 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 Exicure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exicure has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Exicure go up and down completely randomly.

Pair Corralation between Krystal Biotech and Exicure

Given the investment horizon of 90 days Krystal Biotech is expected to generate 0.22 times more return on investment than Exicure. However, Krystal Biotech is 4.45 times less risky than Exicure. It trades about 0.1 of its potential returns per unit of risk. Exicure is currently generating about 0.01 per unit of risk. If you would invest  16,483  in Krystal Biotech on December 20, 2024 and sell it today you would earn a total of  2,435  from holding Krystal Biotech or generate 14.77% 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.  Exicure

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.

Exicure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exicure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Exicure is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Krystal Biotech and Exicure

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

The idea behind Krystal Biotech and Exicure 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.