Correlation Between Instil Bio and Kezar Life

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

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

Diversification Opportunities for Instil Bio and Kezar Life

-0.5

Correlation Coefficient

Instil Bio  Kezar Life

Very good diversification

The 3 months correlation between Instil and Kezar is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio 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 Instil Bio 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 Instil Bio 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 Instil Bio i.e., Instil Bio and Kezar Life go up and down completely randomly.

Pair Corralation between Instil Bio and Kezar Life

Considering the 90-day investment horizon Instil Bio is expected to under-perform the Kezar Life. In addition to that, Instil Bio is 1.13 times more volatile than Kezar Life Sciences. It trades about -0.2 of its total potential returns per unit of risk. Kezar Life Sciences is currently generating about 0.07 per unit of volatility. If you would invest  575.00  in Kezar Life Sciences on September 17, 2024 and sell it today you would earn a total of  100.00  from holding Kezar Life Sciences or generate 17.39% return on investment over 90 days.

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

Instil Bio  vs.  Kezar Life Sciences

Instil Bio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kezar Life Sciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kezar Life Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Kezar Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Instil Bio and Kezar Life

The main advantage of trading using opposite Instil Bio and Kezar Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Instil Bio 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 Instil Bio 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.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.