Correlation Between Cogent Biosciences and Kalvista Pharmaceuticals

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

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

Diversification Opportunities for Cogent Biosciences and Kalvista Pharmaceuticals

0.63

Correlation Coefficient

Cogent Biosciences  Kalvista Pharmaceuticals

Poor diversification

The 3 months correlation between Cogent and Kalvista is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Biosciences and Kalvista Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalvista Pharmaceuticals and Cogent Biosciences 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 Cogent Biosciences are associated (or correlated) with Kalvista Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalvista Pharmaceuticals has no effect on the direction of Cogent Biosciences i.e., Cogent Biosciences and Kalvista Pharmaceuticals go up and down completely randomly.

Pair Corralation between Cogent Biosciences and Kalvista Pharmaceuticals

Given the investment horizon of 90 days Cogent Biosciences is expected to generate 0.72 times more return on investment than Kalvista Pharmaceuticals. However, Cogent Biosciences is 1.38 times less risky than Kalvista Pharmaceuticals. It trades about -0.05 of its potential returns per unit of risk. Kalvista Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest  1,095  in Cogent Biosciences on September 2, 2024 and sell it today you would lose (144.00) from holding Cogent Biosciences or give up 13.15% of portfolio value over 90 days.

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

Cogent Biosciences  vs.  Kalvista Pharmaceuticals

Cogent Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogent Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Kalvista Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalvista Pharmaceuticals 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 essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Cogent Biosciences and Kalvista Pharmaceuticals

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

The idea behind Cogent Biosciences and Kalvista Pharmaceuticals 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.