Correlation Between Kaleido Biosciences and Berkeley LightsInc

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

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

Diversification Opportunities for Kaleido Biosciences and Berkeley LightsInc

-0.28

Correlation Coefficient

Kaleido Biosciences  Berkeley LightsInc

Very good diversification

The 3 months correlation between Kaleido and Berkeley is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kaleido Biosciences and Berkeley LightsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley LightsInc 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 Berkeley LightsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley LightsInc has no effect on the direction of Kaleido Biosciences i.e., Kaleido Biosciences and Berkeley LightsInc go up and down completely randomly.

Pair Corralation between Kaleido Biosciences and Berkeley LightsInc

Given the investment horizon of 90 days Kaleido Biosciences is expected to generate 15.31 times more return on investment than Berkeley LightsInc. However, Kaleido Biosciences is 15.31 times more volatile than Berkeley LightsInc. It trades about 0.11 of its potential returns per unit of risk. Berkeley LightsInc is currently generating about -0.07 per unit of risk. If you would invest  5.00  in Kaleido Biosciences on January 20, 2024 and sell it today you would lose (4.00) from holding Kaleido Biosciences or give up 80.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.5%
Values	Daily Returns

Kaleido Biosciences  vs.  Berkeley LightsInc

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.

Berkeley LightsInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkeley LightsInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Berkeley LightsInc is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kaleido Biosciences and Berkeley LightsInc

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

The idea behind Kaleido Biosciences and Berkeley LightsInc 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.