Correlation Between Agios Pharm and Krystal Biotech

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

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

Diversification Opportunities for Agios Pharm and Krystal Biotech

0.71

Correlation Coefficient

Agios Pharm  Krystal Biotech

Poor diversification

The 3 months correlation between Agios and Krystal is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Agios Pharm and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and Agios Pharm 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 Agios Pharm are associated (or correlated) with Krystal Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krystal Biotech has no effect on the direction of Agios Pharm i.e., Agios Pharm and Krystal Biotech go up and down completely randomly.

Pair Corralation between Agios Pharm and Krystal Biotech

Given the investment horizon of 90 days Agios Pharm is expected to generate 1.73 times more return on investment than Krystal Biotech. However, Agios Pharm is 1.73 times more volatile than Krystal Biotech. It trades about -0.04 of its potential returns per unit of risk. Krystal Biotech is currently generating about -0.08 per unit of risk. If you would invest  4,655  in Agios Pharm on September 20, 2024 and sell it today you would lose (753.00) from holding Agios Pharm or give up 16.18% of portfolio value over 90 days.

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

Agios Pharm  vs.  Krystal Biotech

Agios Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Krystal Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krystal Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Agios Pharm and Krystal Biotech

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

The idea behind Agios Pharm and Krystal Biotech 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.