Correlation Between Nkarta and Monte Rosa

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

By analyzing existing cross correlation between Nkarta Inc and Monte Rosa Therapeutics, you can compare the effects of market volatilities on Nkarta and Monte Rosa 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 Monte Rosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nkarta and Monte Rosa.

Diversification Opportunities for Nkarta and Monte Rosa

0.17

Correlation Coefficient

Nkarta  Monte Rosa

Average diversification

The 3 months correlation between Nkarta and Monte is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Monte Rosa Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monte Rosa Therapeutics 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 Monte Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monte Rosa Therapeutics has no effect on the direction of Nkarta i.e., Nkarta and Monte Rosa go up and down completely randomly.

Pair Corralation between Nkarta and Monte Rosa

Given the investment horizon of 90 days Nkarta Inc is expected to generate 1.49 times more return on investment than Monte Rosa. However, Nkarta is 1.49 times more volatile than Monte Rosa Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Monte Rosa Therapeutics is currently generating about -0.09 per unit of risk. If you would invest  232.00  in Nkarta Inc on December 28, 2024 and sell it today you would lose (32.00) from holding Nkarta Inc or give up 13.79% of portfolio value over 90 days.

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

Nkarta Inc  vs.  Monte Rosa Therapeutics

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Monte Rosa Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monte Rosa Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Nkarta and Monte Rosa

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

The idea behind Nkarta Inc and Monte Rosa 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.