Correlation Between Kineta and Addex Therapeutics

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

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

Diversification Opportunities for Kineta and Addex Therapeutics

-0.58

Correlation Coefficient

Kineta  Addex Therapeutics

Excellent diversification

The 3 months correlation between Kineta and Addex is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kineta Inc and Addex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addex Therapeutics and Kineta 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 Kineta Inc are associated (or correlated) with Addex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addex Therapeutics has no effect on the direction of Kineta i.e., Kineta and Addex Therapeutics go up and down completely randomly.

Pair Corralation between Kineta and Addex Therapeutics

Allowing for the 90-day total investment horizon Kineta Inc is expected to under-perform the Addex Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Kineta Inc is 1.06 times less risky than Addex Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Addex Therapeutics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,360  in Addex Therapeutics on January 19, 2024 and sell it today you would lose (8,160) from holding Addex Therapeutics or give up 78.76% of portfolio value over 90 days.

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

Kineta Inc  vs.  Addex Therapeutics

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 conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Addex Therapeutics

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Addex Therapeutics are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Addex Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kineta and Addex Therapeutics

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

The idea behind Kineta Inc and Addex 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.