Correlation Between Nkarta and Avid Bioservices

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

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

Diversification Opportunities for Nkarta and Avid Bioservices

-0.38

Correlation Coefficient

Nkarta  Avid Bioservices

Very good diversification

The 3 months correlation between Nkarta and Avid is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Avid Bioservices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avid Bioservices and Nkarta 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 Nkarta Inc are associated (or correlated) with Avid Bioservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avid Bioservices has no effect on the direction of Nkarta i.e., Nkarta and Avid Bioservices go up and down completely randomly.

Pair Corralation between Nkarta and Avid Bioservices

Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Avid Bioservices. In addition to that, Nkarta is 39.07 times more volatile than Avid Bioservices. It trades about -0.01 of its total potential returns per unit of risk. Avid Bioservices is currently generating about 0.28 per unit of volatility. If you would invest  1,233  in Avid Bioservices on December 28, 2024 and sell it today you would earn a total of  16.00  from holding Avid Bioservices or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	41.67%
Values	Daily Returns

Nkarta Inc  vs.  Avid Bioservices

Nkarta Inc

Risk-Adjusted Performance

Very Weak

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

Avid Bioservices

Risk-Adjusted Performance

Solid

Over the last 90 days Avid Bioservices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Avid Bioservices is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nkarta and Avid Bioservices

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

The idea behind Nkarta Inc and Avid Bioservices 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.