Correlation Between Kaleido Biosciences and BridgeBio Pharma

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

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

Diversification Opportunities for Kaleido Biosciences and BridgeBio Pharma

-0.21

Correlation Coefficient

Kaleido Biosciences  BridgeBio Pharma

Very good diversification

The 3 months correlation between Kaleido and BridgeBio is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kaleido Biosciences and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma 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 BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Kaleido Biosciences i.e., Kaleido Biosciences and BridgeBio Pharma go up and down completely randomly.

Pair Corralation between Kaleido Biosciences and BridgeBio Pharma

If you would invest  1.00  in Kaleido Biosciences on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Kaleido Biosciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Kaleido Biosciences  vs.  BridgeBio Pharma

Kaleido Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

BridgeBio Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BridgeBio Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kaleido Biosciences and BridgeBio Pharma

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

The idea behind Kaleido Biosciences and BridgeBio Pharma 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.