Correlation Between Kronos Bio and Ascendis Pharma

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

By analyzing existing cross correlation between Kronos Bio and Ascendis Pharma AS, you can compare the effects of market volatilities on Kronos Bio and Ascendis Pharma 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 Kronos Bio with a short position of Ascendis Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Bio and Ascendis Pharma.

Diversification Opportunities for Kronos Bio and Ascendis Pharma

0.33

Correlation Coefficient

Kronos Bio  Ascendis Pharma

Weak diversification

The 3 months correlation between Kronos and Ascendis is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and Kronos Bio 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 Kronos Bio are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Kronos Bio i.e., Kronos Bio and Ascendis Pharma go up and down completely randomly.

Pair Corralation between Kronos Bio and Ascendis Pharma

Given the investment horizon of 90 days Kronos Bio is expected to under-perform the Ascendis Pharma. In addition to that, Kronos Bio is 1.04 times more volatile than Ascendis Pharma AS. It trades about -0.01 of its total potential returns per unit of risk. Ascendis Pharma AS is currently generating about 0.02 per unit of volatility. If you would invest  13,468  in Ascendis Pharma AS on September 2, 2024 and sell it today you would earn a total of  140.00  from holding Ascendis Pharma AS or generate 1.04% return on investment over 90 days.

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

Kronos Bio  vs.  Ascendis Pharma AS

Kronos Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kronos Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Kronos Bio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ascendis Pharma AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendis Pharma AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ascendis Pharma is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kronos Bio and Ascendis Pharma

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

The idea behind Kronos Bio and Ascendis Pharma AS 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.