Correlation Between Aptevo Therapeutics and Kronos Bio

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

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

Diversification Opportunities for Aptevo Therapeutics and Kronos Bio

-0.21

Correlation Coefficient

Aptevo Therapeutics  Kronos Bio

Very good diversification

The 3 months correlation between Aptevo and Kronos is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aptevo Therapeutics and Kronos Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Bio and Aptevo Therapeutics 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 Aptevo Therapeutics 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 Aptevo Therapeutics i.e., Aptevo Therapeutics and Kronos Bio go up and down completely randomly.

Pair Corralation between Aptevo Therapeutics and Kronos Bio

Given the investment horizon of 90 days Aptevo Therapeutics is expected to under-perform the Kronos Bio. In addition to that, Aptevo Therapeutics is 3.56 times more volatile than Kronos Bio. It trades about -0.02 of its total potential returns per unit of risk. Kronos Bio is currently generating about 0.04 per unit of volatility. If you would invest  95.00  in Kronos Bio on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Kronos Bio or generate 5.26% return on investment over 90 days.

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

Aptevo Therapeutics  vs.  Kronos Bio

Aptevo Therapeutics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Aptevo Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kronos Bio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Kronos Bio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aptevo Therapeutics and Kronos Bio

The main advantage of trading using opposite Aptevo Therapeutics and Kronos Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptevo Therapeutics 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 Aptevo Therapeutics 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.

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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.