Correlation Between Karyopharm Therapeutics and Benitec Biopharma

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

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

Diversification Opportunities for Karyopharm Therapeutics and Benitec Biopharma

-0.38

Correlation Coefficient

Karyopharm Therapeutics  Benitec Biopharma

Very good diversification

The 3 months correlation between Karyopharm and Benitec is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Karyopharm Therapeutics and Benitec Biopharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benitec Biopharma and Karyopharm Therapeutics 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 Karyopharm Therapeutics are associated (or correlated) with Benitec Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benitec Biopharma has no effect on the direction of Karyopharm Therapeutics i.e., Karyopharm Therapeutics and Benitec Biopharma go up and down completely randomly.

Pair Corralation between Karyopharm Therapeutics and Benitec Biopharma

Given the investment horizon of 90 days Karyopharm Therapeutics is expected to generate 10.82 times less return on investment than Benitec Biopharma. In addition to that, Karyopharm Therapeutics is 1.01 times more volatile than Benitec Biopharma Ltd. It trades about 0.01 of its total potential returns per unit of risk. Benitec Biopharma Ltd is currently generating about 0.11 per unit of volatility. If you would invest  340.00  in Benitec Biopharma Ltd on September 28, 2024 and sell it today you would earn a total of  860.00  from holding Benitec Biopharma Ltd or generate 252.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Karyopharm Therapeutics  vs.  Benitec Biopharma Ltd

Karyopharm Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Karyopharm Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Benitec Biopharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Benitec Biopharma Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Benitec Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Karyopharm Therapeutics and Benitec Biopharma

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

The idea behind Karyopharm Therapeutics and Benitec Biopharma Ltd 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.