Correlation Between Nkarta and Cns Pharmaceuticals

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

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

Diversification Opportunities for Nkarta and Cns Pharmaceuticals

0.75

Correlation Coefficient

Nkarta  Cns Pharmaceuticals

Poor diversification

The 3 months correlation between Nkarta and Cns is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Cns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cns Pharmaceuticals 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 Cns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cns Pharmaceuticals has no effect on the direction of Nkarta i.e., Nkarta and Cns Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nkarta and Cns Pharmaceuticals

Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Cns Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Nkarta Inc is 1.34 times less risky than Cns Pharmaceuticals. The stock trades about -0.15 of its potential returns per unit of risk. The Cns Pharmaceuticals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Cns Pharmaceuticals on August 30, 2024 and sell it today you would lose (4.00) from holding Cns Pharmaceuticals or give up 25.0% of portfolio value over 90 days.

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

Nkarta Inc  vs.  Cns Pharmaceuticals

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.

Cns Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cns Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Nkarta and Cns Pharmaceuticals

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

The idea behind Nkarta Inc and Cns Pharmaceuticals 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.