Correlation Between Kronos Bio and Lipella Pharmaceuticals

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

By analyzing existing cross correlation between Kronos Bio and Lipella Pharmaceuticals Common, you can compare the effects of market volatilities on Kronos Bio and Lipella Pharmaceuticals 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 Lipella Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Bio and Lipella Pharmaceuticals.

Diversification Opportunities for Kronos Bio and Lipella Pharmaceuticals

0.57

Correlation Coefficient

Kronos Bio  Lipella Pharmaceuticals

Very weak diversification

The 3 months correlation between Kronos and Lipella is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and Lipella Pharmaceuticals Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipella Pharmaceuticals 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 Lipella Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipella Pharmaceuticals has no effect on the direction of Kronos Bio i.e., Kronos Bio and Lipella Pharmaceuticals go up and down completely randomly.

Pair Corralation between Kronos Bio and Lipella Pharmaceuticals

Given the investment horizon of 90 days Kronos Bio is expected to under-perform the Lipella Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Kronos Bio is 2.28 times less risky than Lipella Pharmaceuticals. The stock trades about -0.01 of its potential returns per unit of risk. The Lipella Pharmaceuticals Common is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  332.00  in Lipella Pharmaceuticals Common on August 31, 2024 and sell it today you would lose (21.00) from holding Lipella Pharmaceuticals Common or give up 6.33% of portfolio value over 90 days.

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

Kronos Bio  vs.  Lipella Pharmaceuticals Common

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.

Lipella Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lipella Pharmaceuticals Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Lipella Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Kronos Bio and Lipella Pharmaceuticals

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

The idea behind Kronos Bio and Lipella Pharmaceuticals Common 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.