Correlation Between Kezar Life and Erasca

Can any of the company-specific risk be diversified away by investing in both Kezar Life and Erasca 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 Erasca 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 Erasca Inc, you can compare the effects of market volatilities on Kezar Life and Erasca 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 Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Erasca.

Diversification Opportunities for Kezar Life and Erasca

0.56

Correlation Coefficient

Kezar Life  Erasca

Very weak diversification

The 3 months correlation between Kezar and Erasca is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca 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 Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Kezar Life i.e., Kezar Life and Erasca go up and down completely randomly.

Pair Corralation between Kezar Life and Erasca

Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the Erasca. In addition to that, Kezar Life is 1.04 times more volatile than Erasca Inc. It trades about -0.08 of its total potential returns per unit of risk. Erasca Inc is currently generating about -0.01 per unit of volatility. If you would invest  424.00  in Erasca Inc on October 26, 2024 and sell it today you would lose (229.00) from holding Erasca Inc or give up 54.01% of portfolio value over 90 days.

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

Kezar Life Sciences  vs.  Erasca 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.

Erasca Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erasca Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kezar Life and Erasca

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

The idea behind Kezar Life Sciences and Erasca 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.