Correlation Between Kymera Therapeutics and Caribou Biosciences

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

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

Diversification Opportunities for Kymera Therapeutics and Caribou Biosciences

0.45

Correlation Coefficient

Kymera Therapeutics  Caribou Biosciences

Very weak diversification

The 3 months correlation between Kymera and Caribou is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kymera Therapeutics and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences and Kymera 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 Kymera Therapeutics are associated (or correlated) with Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of Kymera Therapeutics i.e., Kymera Therapeutics and Caribou Biosciences go up and down completely randomly.

Pair Corralation between Kymera Therapeutics and Caribou Biosciences

Given the investment horizon of 90 days Kymera Therapeutics is expected to under-perform the Caribou Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Kymera Therapeutics is 1.57 times less risky than Caribou Biosciences. The stock trades about 0.0 of its potential returns per unit of risk. The Caribou Biosciences is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Caribou Biosciences on August 30, 2024 and sell it today you would earn a total of  4.00  from holding Caribou Biosciences or generate 1.85% return on investment over 90 days.

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

Kymera Therapeutics  vs.  Caribou Biosciences

Kymera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Caribou Biosciences

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Caribou Biosciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Caribou Biosciences may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Kymera Therapeutics and Caribou Biosciences

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

The idea behind Kymera Therapeutics and Caribou Biosciences 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.