Correlation Between Nkarta and Arcellx

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

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

Diversification Opportunities for Nkarta and Arcellx

-0.68

Correlation Coefficient

Nkarta  Arcellx

Excellent diversification

The 3 months correlation between Nkarta and Arcellx is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Arcellx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcellx and Nkarta 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 Nkarta Inc are associated (or correlated) with Arcellx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcellx has no effect on the direction of Nkarta i.e., Nkarta and Arcellx go up and down completely randomly.

Pair Corralation between Nkarta and Arcellx

Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Arcellx. In addition to that, Nkarta is 1.63 times more volatile than Arcellx. It trades about -0.1 of its total potential returns per unit of risk. Arcellx is currently generating about 0.14 per unit of volatility. If you would invest  5,364  in Arcellx on August 30, 2024 and sell it today you would earn a total of  3,543  from holding Arcellx or generate 66.05% return on investment over 90 days.

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

Nkarta Inc  vs.  Arcellx

Nkarta Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nkarta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Arcellx

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arcellx are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Arcellx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nkarta and Arcellx

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

The idea behind Nkarta Inc and Arcellx 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.