Correlation Between StageZero Life and Knight Therapeutics

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

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

Diversification Opportunities for StageZero Life and Knight Therapeutics

0.0

Correlation Coefficient

StageZero Life  Knight Therapeutics

Pay attention - limited upside

The 3 months correlation between StageZero and Knight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding StageZero Life Sciences and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and StageZero 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 StageZero Life Sciences are associated (or correlated) with Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of StageZero Life i.e., StageZero Life and Knight Therapeutics go up and down completely randomly.

Pair Corralation between StageZero Life and Knight Therapeutics

If you would invest  4.00  in StageZero Life Sciences on September 3, 2024 and sell it today you would earn a total of  0.00  from holding StageZero Life Sciences or generate 0.0% return on investment over 90 days.

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

StageZero Life Sciences  vs.  Knight Therapeutics

StageZero Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StageZero Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, StageZero Life is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Knight Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knight Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Knight Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with StageZero Life and Knight Therapeutics

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

The idea behind StageZero Life Sciences and Knight Therapeutics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.