Correlation Between Kronos Bio and Summit Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Kronos Bio and Summit Therapeutics 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 Summit Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kronos Bio and Summit Therapeutics PLC, you can compare the effects of market volatilities on Kronos Bio and Summit Therapeutics 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 Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kronos Bio and Summit Therapeutics.

Diversification Opportunities for Kronos Bio and Summit Therapeutics

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Kronos and Summit is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kronos Bio and Summit Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Therapeutics PLC 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 Summit Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Therapeutics PLC has no effect on the direction of Kronos Bio i.e., Kronos Bio and Summit Therapeutics go up and down completely randomly.

Pair Corralation between Kronos Bio and Summit Therapeutics

Given the investment horizon of 90 days Kronos Bio is expected to generate 0.78 times more return on investment than Summit Therapeutics. However, Kronos Bio is 1.28 times less risky than Summit Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Summit Therapeutics PLC is currently generating about -0.07 per unit of risk. If you would invest  95.00  in Kronos Bio on September 19, 2024 and sell it today you would lose  0.00  from holding Kronos Bio or give up 0.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kronos Bio  vs.  Summit Therapeutics PLC

 Performance 
       Timeline  
Kronos Bio 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Kronos Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.
Summit Therapeutics PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Summit Therapeutics PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kronos Bio and Summit Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kronos Bio and Summit Therapeutics

The main advantage of trading using opposite Kronos Bio and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kronos Bio position performs unexpectedly, Summit Therapeutics 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 Summit Therapeutics will offset losses from the drop in Summit Therapeutics' long position.
The idea behind Kronos Bio and Summit Therapeutics PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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