Correlation Between Kymera Therapeutics and Equillium

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

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

Diversification Opportunities for Kymera Therapeutics and Equillium

0.2

Correlation Coefficient

Kymera Therapeutics  Equillium

Modest diversification

The 3 months correlation between Kymera and Equillium is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kymera Therapeutics and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Kymera Therapeutics 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 Kymera Therapeutics are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Kymera Therapeutics i.e., Kymera Therapeutics and Equillium go up and down completely randomly.

Pair Corralation between Kymera Therapeutics and Equillium

Given the investment horizon of 90 days Kymera Therapeutics is expected to under-perform the Equillium. But the stock apears to be less risky and, when comparing its historical volatility, Kymera Therapeutics is 1.55 times less risky than Equillium. The stock trades about -0.15 of its potential returns per unit of risk. The Equillium is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Equillium on September 12, 2024 and sell it today you would lose (5.00) from holding Equillium or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Kymera Therapeutics  vs.  Equillium

Kymera Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kymera Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Kymera Therapeutics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equillium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kymera Therapeutics and Equillium

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

The idea behind Kymera Therapeutics and Equillium 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.