Correlation Between Takeda Pharmaceutical and Kronos Bio

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

By analyzing existing cross correlation between Takeda Pharmaceutical Co and Kronos Bio, you can compare the effects of market volatilities on Takeda Pharmaceutical 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 Takeda Pharmaceutical with a short position of Kronos Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Takeda Pharmaceutical and Kronos Bio.

Diversification Opportunities for Takeda Pharmaceutical and Kronos Bio

-0.66

Correlation Coefficient

Takeda Pharmaceutical  Kronos Bio

Excellent diversification

The 3 months correlation between Takeda and Kronos is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Takeda Pharmaceutical 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 Takeda Pharmaceutical Co 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 Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Kronos Bio go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Kronos Bio

Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to generate 0.52 times more return on investment than Kronos Bio. However, Takeda Pharmaceutical Co is 1.92 times less risky than Kronos Bio. It trades about 0.2 of its potential returns per unit of risk. Kronos Bio is currently generating about -0.11 per unit of risk. If you would invest  1,317  in Takeda Pharmaceutical Co on December 28, 2024 and sell it today you would earn a total of  185.00  from holding Takeda Pharmaceutical Co or generate 14.05% return on investment over 90 days.

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

Takeda Pharmaceutical Co  vs.  Kronos Bio

Takeda Pharmaceutical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Takeda Pharmaceutical disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kronos Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kronos Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Takeda Pharmaceutical and Kronos Bio

The main advantage of trading using opposite Takeda Pharmaceutical and Kronos Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Takeda Pharmaceutical 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 Takeda Pharmaceutical Co 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.