Correlation Between Universe Pharmaceuticals and Khiron Life

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

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

Diversification Opportunities for Universe Pharmaceuticals and Khiron Life

-0.04

Correlation Coefficient

Universe Pharmaceuticals  Khiron Life

Good diversification

The 3 months correlation between Universe and Khiron is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Universe Pharmaceuticals and Khiron Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khiron Life Sciences and Universe Pharmaceuticals 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 Universe Pharmaceuticals are associated (or correlated) with Khiron Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khiron Life Sciences has no effect on the direction of Universe Pharmaceuticals i.e., Universe Pharmaceuticals and Khiron Life go up and down completely randomly.

Pair Corralation between Universe Pharmaceuticals and Khiron Life

Considering the 90-day investment horizon Universe Pharmaceuticals is expected to under-perform the Khiron Life. But the stock apears to be less risky and, when comparing its historical volatility, Universe Pharmaceuticals is 5.71 times less risky than Khiron Life. The stock trades about -0.02 of its potential returns per unit of risk. The Khiron Life Sciences is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Khiron Life Sciences on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Khiron Life Sciences or generate 0.0% return on investment over 90 days.

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

Universe Pharmaceuticals  vs.  Khiron Life Sciences

Universe Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Khiron Life Sciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khiron Life Sciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Khiron Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universe Pharmaceuticals and Khiron Life

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

The idea behind Universe Pharmaceuticals and Khiron 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.