Correlation Between Krystal Biotech and Cullinan Oncology

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

By analyzing existing cross correlation between Krystal Biotech and Cullinan Oncology LLC, you can compare the effects of market volatilities on Krystal Biotech and Cullinan Oncology 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 Krystal Biotech with a short position of Cullinan Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krystal Biotech and Cullinan Oncology.

Diversification Opportunities for Krystal Biotech and Cullinan Oncology

0.17

Correlation Coefficient

Krystal Biotech  Cullinan Oncology

Average diversification

The 3 months correlation between Krystal and Cullinan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Cullinan Oncology LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullinan Oncology LLC and Krystal Biotech 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 Krystal Biotech are associated (or correlated) with Cullinan Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullinan Oncology LLC has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Cullinan Oncology go up and down completely randomly.

Pair Corralation between Krystal Biotech and Cullinan Oncology

Given the investment horizon of 90 days Krystal Biotech is expected to generate 0.66 times more return on investment than Cullinan Oncology. However, Krystal Biotech is 1.52 times less risky than Cullinan Oncology. It trades about 0.05 of its potential returns per unit of risk. Cullinan Oncology LLC is currently generating about -0.12 per unit of risk. If you would invest  18,678  in Krystal Biotech on September 3, 2024 and sell it today you would earn a total of  1,064  from holding Krystal Biotech or generate 5.7% return on investment over 90 days.

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

Krystal Biotech  vs.  Cullinan Oncology LLC

Krystal Biotech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Krystal Biotech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Krystal Biotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cullinan Oncology LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cullinan Oncology LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Krystal Biotech and Cullinan Oncology

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

The idea behind Krystal Biotech and Cullinan Oncology LLC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.