Correlation Between Krystal Biotech and MeiraGTx Holdings

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

By analyzing existing cross correlation between Krystal Biotech and MeiraGTx Holdings PLC, you can compare the effects of market volatilities on Krystal Biotech and MeiraGTx Holdings 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 MeiraGTx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krystal Biotech and MeiraGTx Holdings.

Diversification Opportunities for Krystal Biotech and MeiraGTx Holdings

-0.1

Correlation Coefficient

Krystal Biotech  MeiraGTx Holdings

Good diversification

The 3 months correlation between Krystal and MeiraGTx is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and MeiraGTx Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeiraGTx Holdings PLC 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 MeiraGTx Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeiraGTx Holdings PLC has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and MeiraGTx Holdings go up and down completely randomly.

Pair Corralation between Krystal Biotech and MeiraGTx Holdings

Given the investment horizon of 90 days Krystal Biotech is expected to generate 7.98 times less return on investment than MeiraGTx Holdings. But when comparing it to its historical volatility, Krystal Biotech is 1.58 times less risky than MeiraGTx Holdings. It trades about 0.05 of its potential returns per unit of risk. MeiraGTx Holdings PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  391.00  in MeiraGTx Holdings PLC on August 31, 2024 and sell it today you would earn a total of  264.00  from holding MeiraGTx Holdings PLC or generate 67.52% return on investment over 90 days.

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

Krystal Biotech  vs.  MeiraGTx Holdings PLC

Krystal Biotech

Risk-Adjusted Performance

3 of 100

Weak

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 December 2024.

MeiraGTx Holdings PLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MeiraGTx Holdings PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MeiraGTx Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Krystal Biotech and MeiraGTx Holdings

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

The idea behind Krystal Biotech and MeiraGTx Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.