Correlation Between Xilio Development and Kiniksa Pharmaceuticals

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

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

Diversification Opportunities for Xilio Development and Kiniksa Pharmaceuticals

-0.51

Correlation Coefficient

Xilio Development  Kiniksa Pharmaceuticals

Excellent diversification

The 3 months correlation between Xilio and Kiniksa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xilio Development and Kiniksa Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiniksa Pharmaceuticals and Xilio Development 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 Xilio Development are associated (or correlated) with Kiniksa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiniksa Pharmaceuticals has no effect on the direction of Xilio Development i.e., Xilio Development and Kiniksa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Xilio Development and Kiniksa Pharmaceuticals

Considering the 90-day investment horizon Xilio Development is expected to generate 3.32 times more return on investment than Kiniksa Pharmaceuticals. However, Xilio Development is 3.32 times more volatile than Kiniksa Pharmaceuticals. It trades about 0.14 of its potential returns per unit of risk. Kiniksa Pharmaceuticals is currently generating about -0.19 per unit of risk. If you would invest  86.00  in Xilio Development on September 23, 2024 and sell it today you would earn a total of  42.00  from holding Xilio Development or generate 48.84% return on investment over 90 days.

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

Xilio Development  vs.  Kiniksa Pharmaceuticals

Xilio Development

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xilio Development are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Xilio Development displayed solid returns over the last few months and may actually be approaching a breakup point.

Kiniksa Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kiniksa Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Xilio Development and Kiniksa Pharmaceuticals

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

The idea behind Xilio Development and Kiniksa Pharmaceuticals 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.