Correlation Between Kaleido Biosciences and Brickell Biotech

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

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

Diversification Opportunities for Kaleido Biosciences and Brickell Biotech

0.89
  Correlation Coefficient
Kaleido Biosciences
Brickell Biotech

Very poor diversification

The 3 months correlation between Kaleido and Brickell is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kaleido Biosciences and Brickell Biotech in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Brickell Biotech and Kaleido Biosciences 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 Kaleido Biosciences are associated (or correlated) with Brickell Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickell Biotech has no effect on the direction of Kaleido Biosciences i.e., Kaleido Biosciences and Brickell Biotech go up and down completely randomly.

Pair Corralation between Kaleido Biosciences and Brickell Biotech

Given the investment horizon of 90 days Kaleido Biosciences is expected to generate 0.96 times more return on investment than Brickell Biotech. However, Kaleido Biosciences is 1.05 times less risky than Brickell Biotech. It trades about 0.03 of its potential returns per unit of risk. Brickell Biotech is currently generating about -0.01 per unit of risk. If you would invest  524.00  in Kaleido Biosciences on August 31, 2021 and sell it today you would lose (81.00)  from holding Kaleido Biosciences or give up 15.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Kaleido Biosciences  vs.  Brickell Biotech

 Performance (%) 
      Timeline 
Kaleido Biosciences 
Kaleido Performance
0 of 100
Over the last 90 days Kaleido Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in December 2021. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kaleido Price Channel

Brickell Biotech 
Brickell Performance
0 of 100
Over the last 90 days Brickell Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in December 2021. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Brickell Price Channel

Kaleido Biosciences and Brickell Biotech Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Kaleido Biosciences and Brickell Biotech

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

Kaleido Biosciences

Pair trading matchups for Kaleido Biosciences

The idea behind Kaleido Biosciences and Brickell Biotech 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.
Check out your portfolio center. 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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