Can any of the company-specific risk be diversified away by investing in both Kiora Pharmaceuticals and Corbus Pharmaceuticals 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 Kiora Pharmaceuticals and Corbus Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kiora Pharmaceuticals and Corbus Pharmaceuticals Holding, you can compare the effects of market volatilities on Kiora Pharmaceuticals and Corbus Pharmaceuticals 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 Kiora Pharmaceuticals with a short position of Corbus Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kiora Pharmaceuticals and Corbus Pharmaceuticals.
Diversification Opportunities for Kiora Pharmaceuticals and Corbus Pharmaceuticals
The 3 months correlation between Kiora and Corbus is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kiora Pharmaceuticals and Corbus Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corbus Pharmaceuticals and Kiora Pharmaceuticals 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 Kiora Pharmaceuticals are associated (or correlated) with Corbus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corbus Pharmaceuticals has no effect on the direction of Kiora Pharmaceuticals i.e., Kiora Pharmaceuticals and Corbus Pharmaceuticals go up and down completely randomly.
Pair Corralation between Kiora Pharmaceuticals and Corbus Pharmaceuticals
Given the investment horizon of 90 days Kiora Pharmaceuticals is expected to under-perform the Corbus Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Kiora Pharmaceuticals is 1.14 times less risky than Corbus Pharmaceuticals. The stock trades about -0.07 of its potential returns per unit of risk. The Corbus Pharmaceuticals Holding is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,460 in Corbus Pharmaceuticals Holding on March 5, 2024 and sell it today you would earn a total of 1,223 from holding Corbus Pharmaceuticals Holding or generate 35.35% return on investment over 90 days.
Over the last 90 days Kiora Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Corbus Pharmaceuticals Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Corbus Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.