Correlation Between Kezar Life and Axogen

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

By analyzing existing cross correlation between Kezar Life Sciences and Axogen Inc, you can compare the effects of market volatilities on Kezar Life and Axogen 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 Kezar Life with a short position of Axogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Axogen.

Diversification Opportunities for Kezar Life and Axogen

-0.63

Correlation Coefficient

Kezar Life  Axogen

Excellent diversification

The 3 months correlation between Kezar and Axogen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Axogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axogen Inc and Kezar Life 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 Kezar Life Sciences are associated (or correlated) with Axogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axogen Inc has no effect on the direction of Kezar Life i.e., Kezar Life and Axogen go up and down completely randomly.

Pair Corralation between Kezar Life and Axogen

Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the Axogen. In addition to that, Kezar Life is 1.08 times more volatile than Axogen Inc. It trades about -0.08 of its total potential returns per unit of risk. Axogen Inc is currently generating about 0.05 per unit of volatility. If you would invest  973.00  in Axogen Inc on October 20, 2024 and sell it today you would earn a total of  836.00  from holding Axogen Inc or generate 85.92% return on investment over 90 days.

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

Kezar Life Sciences  vs.  Axogen Inc

Kezar Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kezar Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Axogen Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axogen Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Axogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kezar Life and Axogen

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

The idea behind Kezar Life Sciences and Axogen Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.