Correlation Between Kodiak Sciences and Mill City

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

By analyzing existing cross correlation between Kodiak Sciences and Mill City Ventures, you can compare the effects of market volatilities on Kodiak Sciences and Mill City 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 Kodiak Sciences with a short position of Mill City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Sciences and Mill City.

Diversification Opportunities for Kodiak Sciences and Mill City

-0.23

Correlation Coefficient

Kodiak Sciences  Mill City

Very good diversification

The 3 months correlation between Kodiak and Mill is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Mill City Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mill City Ventures and Kodiak Sciences 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 Kodiak Sciences are associated (or correlated) with Mill City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mill City Ventures has no effect on the direction of Kodiak Sciences i.e., Kodiak Sciences and Mill City go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Mill City

Considering the 90-day investment horizon Kodiak Sciences is expected to under-perform the Mill City. But the stock apears to be less risky and, when comparing its historical volatility, Kodiak Sciences is 1.81 times less risky than Mill City. The stock trades about -0.21 of its potential returns per unit of risk. The Mill City Ventures is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  253.00  in Mill City Ventures on March 19, 2024 and sell it today you would earn a total of  12.00  from holding Mill City Ventures or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Kodiak Sciences  vs.  Mill City Ventures

Kodiak Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kodiak Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mill City Ventures

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mill City Ventures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Mill City unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kodiak Sciences and Mill City

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

The idea behind Kodiak Sciences and Mill City Ventures 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.