Correlation Between Kezar Life and Revelation Biosciences

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

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

Diversification Opportunities for Kezar Life and Revelation Biosciences

-0.33

Correlation Coefficient

Kezar Life  Revelation Biosciences

Very good diversification

The 3 months correlation between Kezar and Revelation is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Revelation Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revelation Biosciences and Kezar Life 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 Kezar Life Sciences are associated (or correlated) with Revelation Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revelation Biosciences has no effect on the direction of Kezar Life i.e., Kezar Life and Revelation Biosciences go up and down completely randomly.

Pair Corralation between Kezar Life and Revelation Biosciences

Considering the 90-day investment horizon Kezar Life Sciences is expected to generate 1.19 times more return on investment than Revelation Biosciences. However, Kezar Life is 1.19 times more volatile than Revelation Biosciences. It trades about 0.09 of its potential returns per unit of risk. Revelation Biosciences is currently generating about -0.07 per unit of risk. If you would invest  580.00  in Kezar Life Sciences on September 2, 2024 and sell it today you would earn a total of  167.00  from holding Kezar Life Sciences or generate 28.79% return on investment over 90 days.

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

Kezar Life Sciences  vs.  Revelation Biosciences

Kezar Life Sciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kezar Life Sciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Kezar Life reported solid returns over the last few months and may actually be approaching a breakup point.

Revelation Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revelation Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kezar Life and Revelation Biosciences

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

The idea behind Kezar Life Sciences and Revelation Biosciences 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.