Correlation Between Protagonist Therapeutics and Kezar Life

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

By analyzing existing cross correlation between Protagonist Therapeutics and Kezar Life Sciences, you can compare the effects of market volatilities on Protagonist Therapeutics and Kezar Life 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 Protagonist Therapeutics with a short position of Kezar Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Protagonist Therapeutics and Kezar Life.

Diversification Opportunities for Protagonist Therapeutics and Kezar Life

-0.54

Correlation Coefficient

Protagonist Therapeutics  Kezar Life

Excellent diversification

The 3 months correlation between Protagonist and Kezar is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Protagonist Therapeutics and Kezar Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kezar Life Sciences and Protagonist Therapeutics 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 Protagonist Therapeutics are associated (or correlated) with Kezar Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kezar Life Sciences has no effect on the direction of Protagonist Therapeutics i.e., Protagonist Therapeutics and Kezar Life go up and down completely randomly.

Pair Corralation between Protagonist Therapeutics and Kezar Life

Given the investment horizon of 90 days Protagonist Therapeutics is expected to generate 2.18 times more return on investment than Kezar Life. However, Protagonist Therapeutics is 2.18 times more volatile than Kezar Life Sciences. It trades about 0.09 of its potential returns per unit of risk. Kezar Life Sciences is currently generating about -0.17 per unit of risk. If you would invest  3,851  in Protagonist Therapeutics on December 28, 2024 and sell it today you would earn a total of  1,037  from holding Protagonist Therapeutics or generate 26.93% return on investment over 90 days.

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

Protagonist Therapeutics  vs.  Kezar Life Sciences

Protagonist Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Protagonist Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Protagonist Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Kezar Life Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kezar Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Protagonist Therapeutics and Kezar Life

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

The idea behind Protagonist Therapeutics and Kezar Life Sciences 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.