Correlation Between Kinnate Biopharma and Verve Therapeutics

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

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

Diversification Opportunities for Kinnate Biopharma and Verve Therapeutics

0.43

Correlation Coefficient

Kinnate Biopharma  Verve Therapeutics

Very weak diversification

The 3 months correlation between Kinnate and Verve is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kinnate Biopharma and Verve Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verve Therapeutics and Kinnate Biopharma 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 Kinnate Biopharma are associated (or correlated) with Verve Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verve Therapeutics has no effect on the direction of Kinnate Biopharma i.e., Kinnate Biopharma and Verve Therapeutics go up and down completely randomly.

Pair Corralation between Kinnate Biopharma and Verve Therapeutics

If you would invest  498.00  in Verve Therapeutics on September 28, 2024 and sell it today you would earn a total of  132.00  from holding Verve Therapeutics or generate 26.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.8%
Values	Daily Returns

Kinnate Biopharma  vs.  Verve Therapeutics

Kinnate Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinnate Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kinnate Biopharma is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Verve Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verve Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Verve Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinnate Biopharma and Verve Therapeutics

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

The idea behind Kinnate Biopharma and Verve Therapeutics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.