Correlation Between Zura Bio and Kronos Bio

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

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

Diversification Opportunities for Zura Bio and Kronos Bio

0.3

Correlation Coefficient

Zura Bio  Kronos Bio

Weak diversification

The 3 months correlation between Zura and Kronos is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zura Bio Limited and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Zura Bio 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 Zura Bio Limited are associated (or correlated) with Kronos Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Bio has no effect on the direction of Zura Bio i.e., Zura Bio and Kronos Bio go up and down completely randomly.

Pair Corralation between Zura Bio and Kronos Bio

Given the investment horizon of 90 days Zura Bio Limited is expected to generate 3.13 times more return on investment than Kronos Bio. However, Zura Bio is 3.13 times more volatile than Kronos Bio. It trades about 0.02 of its potential returns per unit of risk. Kronos Bio is currently generating about 0.0 per unit of risk. If you would invest  816.00  in Zura Bio Limited on September 5, 2024 and sell it today you would lose (546.00) from holding Zura Bio Limited or give up 66.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.27%
Values	Daily Returns

Zura Bio Limited  vs.  Kronos Bio

Zura Bio Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zura Bio Limited 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.

Kronos Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kronos Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kronos Bio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zura Bio and Kronos Bio

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

The idea behind Zura Bio Limited and Kronos Bio 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.