Correlation Between Kaltura and Menlo Therapeutics

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

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

Diversification Opportunities for Kaltura and Menlo Therapeutics

0.0

Correlation Coefficient

Kaltura  Menlo Therapeutics

Pay attention - limited upside

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

Pair Corralation between Kaltura and Menlo Therapeutics

If you would invest (100.00) in Menlo Therapeutics on February 3, 2024 and sell it today you would earn a total of  100.00  from holding Menlo Therapeutics or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kaltura  vs.  Menlo Therapeutics

Kaltura

Risk-Adjusted Performance

0 of 100

Very Weak

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

Menlo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Menlo Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Menlo Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kaltura and Menlo Therapeutics

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

The idea behind Kaltura and Menlo 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.