Correlation Between Veracyte and Kiromic Biopharma

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

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

Diversification Opportunities for Veracyte and Kiromic Biopharma

-0.59

Correlation Coefficient

Veracyte  Kiromic Biopharma

Excellent diversification

The 3 months correlation between Veracyte and Kiromic is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Veracyte and Kiromic Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiromic Biopharma and Veracyte 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 Veracyte are associated (or correlated) with Kiromic Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiromic Biopharma has no effect on the direction of Veracyte i.e., Veracyte and Kiromic Biopharma go up and down completely randomly.

Pair Corralation between Veracyte and Kiromic Biopharma

Given the investment horizon of 90 days Veracyte is expected to generate 0.33 times more return on investment than Kiromic Biopharma. However, Veracyte is 3.02 times less risky than Kiromic Biopharma. It trades about 0.04 of its potential returns per unit of risk. Kiromic Biopharma is currently generating about -0.02 per unit of risk. If you would invest  2,909  in Veracyte on September 2, 2024 and sell it today you would earn a total of  1,386  from holding Veracyte or generate 47.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.05%
Values	Daily Returns

Veracyte  vs.  Kiromic Biopharma

Veracyte

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veracyte are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Veracyte unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kiromic Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kiromic Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Kiromic Biopharma is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Veracyte and Kiromic Biopharma

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

The idea behind Veracyte and Kiromic Biopharma 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.