Correlation Between Forte Biosciences and Kineta

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

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

Diversification Opportunities for Forte Biosciences and Kineta

-0.2

Correlation Coefficient

Forte Biosciences  Kineta

Good diversification

The 3 months correlation between Forte and Kineta is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Forte Biosciences and Kineta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kineta Inc and Forte 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 Forte Biosciences are associated (or correlated) with Kineta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kineta Inc has no effect on the direction of Forte Biosciences i.e., Forte Biosciences and Kineta go up and down completely randomly.

Pair Corralation between Forte Biosciences and Kineta

Given the investment horizon of 90 days Forte Biosciences is expected to generate 6.91 times more return on investment than Kineta. However, Forte Biosciences is 6.91 times more volatile than Kineta Inc. It trades about 0.28 of its potential returns per unit of risk. Kineta Inc is currently generating about -0.86 per unit of risk. If you would invest  611.00  in Forte Biosciences on September 18, 2024 and sell it today you would earn a total of  1,285  from holding Forte Biosciences or generate 210.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

Forte Biosciences  vs.  Kineta Inc

Forte Biosciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forte Biosciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Forte Biosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Kineta Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kineta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kineta is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Forte Biosciences and Kineta

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

The idea behind Forte Biosciences and Kineta 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 Global Correlations module to find global opportunities by holding instruments from different markets.