Correlation Between Kezar Life and Altimmune

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

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

Diversification Opportunities for Kezar Life and Altimmune

0.8

Correlation Coefficient

Kezar Life  Altimmune

Very poor diversification

The 3 months correlation between Kezar and Altimmune is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Altimmune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altimmune and Kezar Life 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 Kezar Life Sciences are associated (or correlated) with Altimmune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altimmune has no effect on the direction of Kezar Life i.e., Kezar Life and Altimmune go up and down completely randomly.

Pair Corralation between Kezar Life and Altimmune

Considering the 90-day investment horizon Kezar Life Sciences is expected to generate 0.82 times more return on investment than Altimmune. However, Kezar Life Sciences is 1.22 times less risky than Altimmune. It trades about -0.12 of its potential returns per unit of risk. Altimmune is currently generating about -0.44 per unit of risk. If you would invest  92.00  in Kezar Life Sciences on January 31, 2024 and sell it today you would lose (10.00) from holding Kezar Life Sciences or give up 10.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Kezar Life Sciences  vs.  Altimmune

Kezar Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kezar Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Altimmune

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altimmune 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 essential indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Kezar Life and Altimmune

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

The idea behind Kezar Life Sciences and Altimmune 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.