Correlation Between Caribou Biosciences and Nkarta

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

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

Diversification Opportunities for Caribou Biosciences and Nkarta

-0.06

Correlation Coefficient

Caribou Biosciences  Nkarta

Good diversification

The 3 months correlation between Caribou and Nkarta is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Nkarta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nkarta Inc and Caribou 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 Caribou Biosciences are associated (or correlated) with Nkarta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nkarta Inc has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Nkarta go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Nkarta

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Nkarta. But the stock apears to be less risky and, when comparing its historical volatility, Caribou Biosciences is 1.07 times less risky than Nkarta. The stock trades about -0.27 of its potential returns per unit of risk. The Nkarta Inc is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  299.00  in Nkarta Inc on September 28, 2024 and sell it today you would lose (57.00) from holding Nkarta Inc or give up 19.06% of portfolio value over 90 days.

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

Caribou Biosciences  vs.  Nkarta Inc

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nkarta Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nkarta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Caribou Biosciences and Nkarta

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

The idea behind Caribou Biosciences and Nkarta Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.