Correlation Between Conduit Pharmaceuticals and Karyopharm Therapeutics

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

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

Diversification Opportunities for Conduit Pharmaceuticals and Karyopharm Therapeutics

-0.68

Correlation Coefficient

Conduit Pharmaceuticals  Karyopharm Therapeutics

Excellent diversification

The 3 months correlation between Conduit and Karyopharm is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Conduit Pharmaceuticals and Karyopharm Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karyopharm Therapeutics and Conduit Pharmaceuticals 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 Conduit Pharmaceuticals are associated (or correlated) with Karyopharm Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karyopharm Therapeutics has no effect on the direction of Conduit Pharmaceuticals i.e., Conduit Pharmaceuticals and Karyopharm Therapeutics go up and down completely randomly.

Pair Corralation between Conduit Pharmaceuticals and Karyopharm Therapeutics

Assuming the 90 days horizon Conduit Pharmaceuticals is expected to generate 5.09 times more return on investment than Karyopharm Therapeutics. However, Conduit Pharmaceuticals is 5.09 times more volatile than Karyopharm Therapeutics. It trades about 0.19 of its potential returns per unit of risk. Karyopharm Therapeutics is currently generating about 0.03 per unit of risk. If you would invest  1.00  in Conduit Pharmaceuticals on September 5, 2024 and sell it today you would earn a total of  1.00  from holding Conduit Pharmaceuticals or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	49.21%
Values	Daily Returns

Conduit Pharmaceuticals  vs.  Karyopharm Therapeutics

Conduit Pharmaceuticals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conduit Pharmaceuticals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Conduit Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Karyopharm Therapeutics

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Karyopharm Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, Karyopharm Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Conduit Pharmaceuticals and Karyopharm Therapeutics

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

The idea behind Conduit Pharmaceuticals and Karyopharm Therapeutics 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.