Correlation Between Longboard Pharmaceuticals and Kineta

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

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

Diversification Opportunities for Longboard Pharmaceuticals and Kineta

-0.2

Correlation Coefficient

Longboard Pharmaceuticals  Kineta

Good diversification

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

Pair Corralation between Longboard Pharmaceuticals and Kineta

Given the investment horizon of 90 days Longboard Pharmaceuticals is expected to generate 0.97 times more return on investment than Kineta. However, Longboard Pharmaceuticals is 1.03 times less risky than Kineta. It trades about 0.2 of its potential returns per unit of risk. Kineta Inc is currently generating about -0.01 per unit of risk. If you would invest  2,931  in Longboard Pharmaceuticals on September 18, 2024 and sell it today you would earn a total of  3,067  from holding Longboard Pharmaceuticals or generate 104.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.45%
Values	Daily Returns

Longboard Pharmaceuticals  vs.  Kineta Inc

Longboard Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Longboard Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating basic indicators, Longboard Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kineta Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kineta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kineta is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Longboard Pharmaceuticals and Kineta

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

The idea behind Longboard Pharmaceuticals and Kineta Inc 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..