Correlation Between Affimed NV and Kodiak Sciences

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

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

Diversification Opportunities for Affimed NV and Kodiak Sciences

-0.47

Correlation Coefficient

Affimed NV  Kodiak Sciences

Very good diversification

The 3 months correlation between Affimed and Kodiak is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Affimed NV and Kodiak Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Sciences and Affimed NV 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 Affimed NV are associated (or correlated) with Kodiak Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Sciences has no effect on the direction of Affimed NV i.e., Affimed NV and Kodiak Sciences go up and down completely randomly.

Pair Corralation between Affimed NV and Kodiak Sciences

Given the investment horizon of 90 days Affimed NV is expected to under-perform the Kodiak Sciences. But the stock apears to be less risky and, when comparing its historical volatility, Affimed NV is 1.03 times less risky than Kodiak Sciences. The stock trades about -0.11 of its potential returns per unit of risk. The Kodiak Sciences is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  242.00  in Kodiak Sciences on September 3, 2024 and sell it today you would earn a total of  425.00  from holding Kodiak Sciences or generate 175.62% return on investment over 90 days.

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

Affimed NV  vs.  Kodiak Sciences

Affimed NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affimed NV 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 primary 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.

Kodiak Sciences

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affimed NV and Kodiak Sciences

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

The idea behind Affimed NV and Kodiak 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.