Correlation Between Nkarta and Lyell Immunopharma

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

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

Diversification Opportunities for Nkarta and Lyell Immunopharma

0.04

Correlation Coefficient

Nkarta  Lyell Immunopharma

Significant diversification

The 3 months correlation between Nkarta and Lyell is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Lyell Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyell Immunopharma 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 Lyell Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyell Immunopharma has no effect on the direction of Nkarta i.e., Nkarta and Lyell Immunopharma go up and down completely randomly.

Pair Corralation between Nkarta and Lyell Immunopharma

Given the investment horizon of 90 days Nkarta Inc is expected to generate 1.28 times more return on investment than Lyell Immunopharma. However, Nkarta is 1.28 times more volatile than Lyell Immunopharma. It trades about 0.0 of its potential returns per unit of risk. Lyell Immunopharma is currently generating about -0.01 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.  Lyell Immunopharma

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.

Lyell Immunopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Lyell Immunopharma is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nkarta and Lyell Immunopharma

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

The idea behind Nkarta Inc and Lyell Immunopharma 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.