Correlation Between Unicycive Therapeutics and Kodiak Sciences

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

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

Diversification Opportunities for Unicycive Therapeutics and Kodiak Sciences

0.8

Correlation Coefficient

Unicycive Therapeutics  Kodiak Sciences

Very poor diversification

The 3 months correlation between Unicycive and Kodiak is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Unicycive Therapeutics and Kodiak Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Sciences and Unicycive 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 Unicycive Therapeutics are associated (or correlated) with Kodiak Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Sciences has no effect on the direction of Unicycive Therapeutics i.e., Unicycive Therapeutics and Kodiak Sciences go up and down completely randomly.

Pair Corralation between Unicycive Therapeutics and Kodiak Sciences

Given the investment horizon of 90 days Unicycive Therapeutics is expected to generate 0.78 times more return on investment than Kodiak Sciences. However, Unicycive Therapeutics is 1.28 times less risky than Kodiak Sciences. It trades about -0.17 of its potential returns per unit of risk. Kodiak Sciences is currently generating about -0.28 per unit of risk. If you would invest  79.00  in Unicycive Therapeutics on December 2, 2024 and sell it today you would lose (24.00) from holding Unicycive Therapeutics or give up 30.38% of portfolio value over 90 days.

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

Unicycive Therapeutics  vs.  Kodiak Sciences

Unicycive Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unicycive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kodiak Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kodiak Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Unicycive Therapeutics and Kodiak Sciences

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

The idea behind Unicycive Therapeutics and Kodiak 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.