Correlation Between Kezar Life and InspireMD

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

Diversification Opportunities for Kezar Life and InspireMD

-0.53

Correlation Coefficient

Kezar Life  InspireMD

Excellent diversification

The 3 months correlation between Kezar and InspireMD is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and InspireMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InspireMD 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 InspireMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InspireMD has no effect on the direction of Kezar Life i.e., Kezar Life and InspireMD go up and down completely randomly.

Pair Corralation between Kezar Life and InspireMD

Considering the 90-day investment horizon Kezar Life Sciences is expected to generate 0.79 times more return on investment than InspireMD. However, Kezar Life Sciences is 1.26 times less risky than InspireMD. It trades about -0.1 of its potential returns per unit of risk. InspireMD is currently generating about -0.11 per unit of risk. If you would invest  705.00  in Kezar Life Sciences on October 5, 2024 and sell it today you would lose (33.00) from holding Kezar Life Sciences or give up 4.68% of portfolio value over 90 days.

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

Kezar Life Sciences  vs.  InspireMD

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 latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

InspireMD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InspireMD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, InspireMD 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 Kezar Life and InspireMD

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

The idea behind Kezar Life Sciences and InspireMD 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.