Correlation Between Nkarta and Kronos Bio

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

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

Diversification Opportunities for Nkarta and Kronos Bio

0.29

Correlation Coefficient

Nkarta  Kronos Bio

Modest diversification

The 3 months correlation between Nkarta and Kronos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio 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 Kronos Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Bio has no effect on the direction of Nkarta i.e., Nkarta and Kronos Bio go up and down completely randomly.

Pair Corralation between Nkarta and Kronos Bio

Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Kronos Bio. In addition to that, Nkarta is 1.2 times more volatile than Kronos Bio. It trades about -0.24 of its total potential returns per unit of risk. Kronos Bio is currently generating about 0.05 per unit of volatility. If you would invest  94.00  in Kronos Bio on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Kronos Bio or generate 8.51% return on investment over 90 days.

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

Nkarta Inc  vs.  Kronos Bio

Nkarta Inc

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kronos Bio

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Bio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Kronos Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nkarta and Kronos Bio

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

The idea behind Nkarta Inc and Kronos Bio 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.