Correlation Between Kodiak Sciences and KIN

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

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

Diversification Opportunities for Kodiak Sciences and KIN

-0.66

Correlation Coefficient

Kodiak Sciences  KIN

Excellent diversification

The 3 months correlation between Kodiak and KIN is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and KIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIN 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 KIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIN has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and KIN go up and down completely randomly.

Pair Corralation between Kodiak Sciences and KIN

Considering the 90-day investment horizon Kodiak Sciences is expected to generate 0.6 times more return on investment than KIN. However, Kodiak Sciences is 1.66 times less risky than KIN. It trades about 0.41 of its potential returns per unit of risk. KIN is currently generating about -0.04 per unit of risk. If you would invest  242.00  in Kodiak Sciences on September 3, 2024 and sell it today you would earn a total of  425.00  from holding Kodiak Sciences or generate 175.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Kodiak Sciences  vs.  KIN

Kodiak Sciences

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Sciences are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Kodiak Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

KIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for KIN shareholders.

Pair Trading with Kodiak Sciences and KIN

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

The idea behind Kodiak Sciences and KIN 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.