Correlation Between Kezar Life and Neoleukin Therapeutics

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

Diversification Opportunities for Kezar Life and Neoleukin Therapeutics

0.0

Correlation Coefficient

Kezar Life  Neoleukin Therapeutics

Pay attention - limited upside

The 3 months correlation between Kezar and Neoleukin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Neoleukin Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neoleukin Therapeutics 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 Neoleukin Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neoleukin Therapeutics has no effect on the direction of Kezar Life i.e., Kezar Life and Neoleukin Therapeutics go up and down completely randomly.

Pair Corralation between Kezar Life and Neoleukin Therapeutics

If you would invest  69.00  in Neoleukin Therapeutics on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Neoleukin Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Kezar Life Sciences  vs.  Neoleukin Therapeutics

Kezar Life Sciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kezar Life Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Kezar Life reported solid returns over the last few months and may actually be approaching a breakup point.

Neoleukin Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neoleukin Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Neoleukin Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kezar Life and Neoleukin Therapeutics

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

The idea behind Kezar Life Sciences and Neoleukin Therapeutics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.