Correlation Between Iovance Biotherapeutics and Krystal Biotech

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

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

Diversification Opportunities for Iovance Biotherapeutics and Krystal Biotech

0.16

Correlation Coefficient

Iovance Biotherapeutics  Krystal Biotech

Average diversification

The 3 months correlation between Iovance and Krystal is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Iovance Biotherapeutics and Krystal Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krystal Biotech and Iovance Biotherapeutics 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 Iovance Biotherapeutics are associated (or correlated) with Krystal Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krystal Biotech has no effect on the direction of Iovance Biotherapeutics i.e., Iovance Biotherapeutics and Krystal Biotech go up and down completely randomly.

Pair Corralation between Iovance Biotherapeutics and Krystal Biotech

Given the investment horizon of 90 days Iovance Biotherapeutics is expected to under-perform the Krystal Biotech. In addition to that, Iovance Biotherapeutics is 1.82 times more volatile than Krystal Biotech. It trades about -0.03 of its total potential returns per unit of risk. Krystal Biotech is currently generating about 0.05 per unit of volatility. If you would invest  18,678  in Krystal Biotech on August 31, 2024 and sell it today you would earn a total of  1,013  from holding Krystal Biotech or generate 5.42% return on investment over 90 days.

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

Iovance Biotherapeutics  vs.  Krystal Biotech

Iovance Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iovance Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Krystal Biotech

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Krystal Biotech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Krystal Biotech may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Iovance Biotherapeutics and Krystal Biotech

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

The idea behind Iovance Biotherapeutics and Krystal Biotech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.