Correlation Between Kaleido Biosciences and Pharmather Holdings

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

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

Diversification Opportunities for Kaleido Biosciences and Pharmather Holdings

0.27

Correlation Coefficient

Kaleido Biosciences  Pharmather Holdings

Modest diversification

The 3 months correlation between Kaleido and Pharmather is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kaleido Biosciences and Pharmather Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmather Holdings and Kaleido 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 Kaleido Biosciences are associated (or correlated) with Pharmather Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmather Holdings has no effect on the direction of Kaleido Biosciences i.e., Kaleido Biosciences and Pharmather Holdings go up and down completely randomly.

Pair Corralation between Kaleido Biosciences and Pharmather Holdings

If you would invest  21.00  in Pharmather Holdings on September 5, 2024 and sell it today you would lose (2.00) from holding Pharmather Holdings or give up 9.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Kaleido Biosciences  vs.  Pharmather Holdings

Kaleido Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaleido Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Kaleido Biosciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pharmather Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharmather Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pharmather Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kaleido Biosciences and Pharmather Holdings

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

The idea behind Kaleido Biosciences and Pharmather Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.