Correlation Between Theriva Biologics and KTRA Old

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

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

Diversification Opportunities for Theriva Biologics and KTRA Old

0.5

Correlation Coefficient

Theriva Biologics  KTRA Old

Very weak diversification

The 3 months correlation between Theriva and KTRA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Theriva Biologics and KTRA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTRA Old and Theriva Biologics 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 Theriva Biologics are associated (or correlated) with KTRA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTRA Old has no effect on the direction of Theriva Biologics i.e., Theriva Biologics and KTRA Old go up and down completely randomly.

Pair Corralation between Theriva Biologics and KTRA Old

Given the investment horizon of 90 days Theriva Biologics is expected to under-perform the KTRA Old. But the stock apears to be less risky and, when comparing its historical volatility, Theriva Biologics is 6.74 times less risky than KTRA Old. The stock trades about -0.04 of its potential returns per unit of risk. The KTRA Old is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  22,190  in KTRA Old on October 11, 2024 and sell it today you would lose (21,560) from holding KTRA Old or give up 97.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.91%
Values	Daily Returns

Theriva Biologics  vs.  KTRA Old

Theriva Biologics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Theriva Biologics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Theriva Biologics showed solid returns over the last few months and may actually be approaching a breakup point.

KTRA Old

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days KTRA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, KTRA Old sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Theriva Biologics and KTRA Old

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

The idea behind Theriva Biologics and KTRA Old 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.