Correlation Between Karyopharm Therapeutics and Caredx

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

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

Diversification Opportunities for Karyopharm Therapeutics and Caredx

0.22

Correlation Coefficient

Karyopharm Therapeutics  Caredx

Modest diversification

The 3 months correlation between Karyopharm and Caredx is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Karyopharm Therapeutics and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc 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 Caredx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caredx Inc has no effect on the direction of Karyopharm Therapeutics i.e., Karyopharm Therapeutics and Caredx go up and down completely randomly.

Pair Corralation between Karyopharm Therapeutics and Caredx

Given the investment horizon of 90 days Karyopharm Therapeutics is expected to under-perform the Caredx. But the stock apears to be less risky and, when comparing its historical volatility, Karyopharm Therapeutics is 1.0 times less risky than Caredx. The stock trades about -0.41 of its potential returns per unit of risk. The Caredx Inc is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest  2,491  in Caredx Inc on September 28, 2024 and sell it today you would lose (400.50) from holding Caredx Inc or give up 16.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Karyopharm Therapeutics  vs.  Caredx Inc

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.

Caredx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caredx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Karyopharm Therapeutics and Caredx

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

The idea behind Karyopharm Therapeutics and Caredx Inc 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.