Correlation Between Khiron Life and Earth Science

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

By analyzing existing cross correlation between Khiron Life Sciences and Earth Science Tech, you can compare the effects of market volatilities on Khiron Life and Earth Science 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 Khiron Life with a short position of Earth Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khiron Life and Earth Science.

Diversification Opportunities for Khiron Life and Earth Science

-0.06

Correlation Coefficient

Khiron Life  Earth Science

Good diversification

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

Pair Corralation between Khiron Life and Earth Science

Assuming the 90 days horizon Khiron Life Sciences is expected to generate 5.67 times more return on investment than Earth Science. However, Khiron Life is 5.67 times more volatile than Earth Science Tech. It trades about 0.07 of its potential returns per unit of risk. Earth Science Tech is currently generating about 0.08 per unit of risk. If you would invest  1.50  in Khiron Life Sciences on September 12, 2024 and sell it today you would lose (1.50) from holding Khiron Life Sciences or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Khiron Life Sciences  vs.  Earth Science Tech

Khiron Life Sciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khiron Life Sciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Khiron Life reported solid returns over the last few months and may actually be approaching a breakup point.

Earth Science Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Earth Science Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Earth Science may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Khiron Life and Earth Science

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

The idea behind Khiron Life Sciences and Earth Science Tech 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.