Correlation Between Zura Bio and Nkarta

Can any of the company-specific risk be diversified away by investing in both Zura Bio and Nkarta 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 Nkarta 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 Nkarta Inc, you can compare the effects of market volatilities on Zura Bio and Nkarta 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 Nkarta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zura Bio and Nkarta.

Diversification Opportunities for Zura Bio and Nkarta

0.74

Correlation Coefficient

Zura Bio  Nkarta

Poor diversification

The 3 months correlation between Zura and Nkarta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zura Bio Limited and Nkarta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nkarta Inc 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 Nkarta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nkarta Inc has no effect on the direction of Zura Bio i.e., Zura Bio and Nkarta go up and down completely randomly.

Pair Corralation between Zura Bio and Nkarta

Given the investment horizon of 90 days Zura Bio Limited is expected to under-perform the Nkarta. In addition to that, Zura Bio is 1.42 times more volatile than Nkarta Inc. It trades about -0.14 of its total potential returns per unit of risk. Nkarta Inc is currently generating about -0.2 per unit of volatility. If you would invest  241.00  in Nkarta Inc on December 27, 2024 and sell it today you would lose (104.00) from holding Nkarta Inc or give up 43.15% of portfolio value over 90 days.

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

Zura Bio Limited  vs.  Nkarta Inc

Zura Bio Limited

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain somewhat 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.

Nkarta Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nkarta Inc 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 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.

Pair Trading with Zura Bio and Nkarta

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

The idea behind Zura Bio Limited and Nkarta Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.