Correlation Between Kaleido Biosciences and Equillium

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

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

Diversification Opportunities for Kaleido Biosciences and Equillium

-0.07

Correlation Coefficient

Kaleido Biosciences  Equillium

Good diversification

The 3 months correlation between Kaleido and Equillium is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kaleido Biosciences and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium 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 Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Kaleido Biosciences i.e., Kaleido Biosciences and Equillium go up and down completely randomly.

Pair Corralation between Kaleido Biosciences and Equillium

If you would invest  58.00  in Equillium on January 20, 2024 and sell it today you would earn a total of  103.00  from holding Equillium or generate 177.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.81%
Values	Daily Returns

Kaleido Biosciences  vs.  Equillium

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.

Equillium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kaleido Biosciences and Equillium

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

The idea behind Kaleido Biosciences and Equillium 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 the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.