Correlation Between ProKidney Corp and Kalvista Pharmaceuticals

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

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

Diversification Opportunities for ProKidney Corp and Kalvista Pharmaceuticals

-0.86

Correlation Coefficient

ProKidney Corp  Kalvista Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between ProKidney and Kalvista is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding ProKidney Corp and Kalvista Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalvista Pharmaceuticals and ProKidney Corp 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 ProKidney Corp are associated (or correlated) with Kalvista Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalvista Pharmaceuticals has no effect on the direction of ProKidney Corp i.e., ProKidney Corp and Kalvista Pharmaceuticals go up and down completely randomly.

Pair Corralation between ProKidney Corp and Kalvista Pharmaceuticals

Given the investment horizon of 90 days ProKidney Corp is expected to under-perform the Kalvista Pharmaceuticals. In addition to that, ProKidney Corp is 1.37 times more volatile than Kalvista Pharmaceuticals. It trades about -0.2 of its total potential returns per unit of risk. Kalvista Pharmaceuticals is currently generating about 0.18 per unit of volatility. If you would invest  883.00  in Kalvista Pharmaceuticals on December 21, 2024 and sell it today you would earn a total of  317.00  from holding Kalvista Pharmaceuticals or generate 35.9% return on investment over 90 days.

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

ProKidney Corp  vs.  Kalvista Pharmaceuticals

ProKidney Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProKidney Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kalvista Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kalvista Pharmaceuticals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Kalvista Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProKidney Corp and Kalvista Pharmaceuticals

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

The idea behind ProKidney Corp and Kalvista Pharmaceuticals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.