Correlation Between Kodiak Sciences and Gracell Biotechnologies

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

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

Diversification Opportunities for Kodiak Sciences and Gracell Biotechnologies

0.75

Correlation Coefficient

Kodiak Sciences  Gracell Biotechnologies

Poor diversification

The 3 months correlation between Kodiak and Gracell is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Gracell Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gracell Biotechnologies and Kodiak Sciences 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 Kodiak Sciences are associated (or correlated) with Gracell Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gracell Biotechnologies has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and Gracell Biotechnologies go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Gracell Biotechnologies

If you would invest  268.00  in Kodiak Sciences on September 16, 2024 and sell it today you would earn a total of  579.00  from holding Kodiak Sciences or generate 216.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Kodiak Sciences  vs.  Gracell Biotechnologies

Kodiak Sciences

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gracell Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gracell Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Gracell Biotechnologies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kodiak Sciences and Gracell Biotechnologies

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

The idea behind Kodiak Sciences and Gracell Biotechnologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.