Correlation Between Kronos Bio and RenovoRx

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

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

Diversification Opportunities for Kronos Bio and RenovoRx

-0.44

Correlation Coefficient

Kronos Bio  RenovoRx

Very good diversification

The 3 months correlation between Kronos and RenovoRx is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and RenovoRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenovoRx 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 RenovoRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenovoRx has no effect on the direction of Kronos Bio i.e., Kronos Bio and RenovoRx go up and down completely randomly.

Pair Corralation between Kronos Bio and RenovoRx

Given the investment horizon of 90 days Kronos Bio is expected to under-perform the RenovoRx. But the stock apears to be less risky and, when comparing its historical volatility, Kronos Bio is 1.42 times less risky than RenovoRx. The stock trades about 0.0 of its potential returns per unit of risk. The RenovoRx is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  326.00  in RenovoRx on August 31, 2024 and sell it today you would lose (199.00) from holding RenovoRx or give up 61.04% of portfolio value over 90 days.

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

Kronos Bio  vs.  RenovoRx

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.

RenovoRx

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RenovoRx are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, RenovoRx unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kronos Bio and RenovoRx

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

The idea behind Kronos Bio and RenovoRx 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.