Correlation Between Beam Therapeutics and Kinnate Biopharma

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

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

Diversification Opportunities for Beam Therapeutics and Kinnate Biopharma

-0.15

Correlation Coefficient

Beam Therapeutics  Kinnate Biopharma

Good diversification

The 3 months correlation between Beam and Kinnate is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Beam Therapeutics and Kinnate Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinnate Biopharma and Beam 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 Beam Therapeutics are associated (or correlated) with Kinnate Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinnate Biopharma has no effect on the direction of Beam Therapeutics i.e., Beam Therapeutics and Kinnate Biopharma go up and down completely randomly.

Pair Corralation between Beam Therapeutics and Kinnate Biopharma

If you would invest  2,720  in Beam Therapeutics on September 28, 2024 and sell it today you would earn a total of  150.00  from holding Beam Therapeutics or generate 5.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Beam Therapeutics  vs.  Kinnate Biopharma

Beam Therapeutics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beam Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Beam Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Kinnate Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnate Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kinnate Biopharma is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Beam Therapeutics and Kinnate Biopharma

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

The idea behind Beam Therapeutics and Kinnate Biopharma 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..