Correlation Between Monte Rosa and Kymera Therapeutics

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

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

Diversification Opportunities for Monte Rosa and Kymera Therapeutics

0.43

Correlation Coefficient

Monte Rosa  Kymera Therapeutics

Very weak diversification

The 3 months correlation between Monte and Kymera is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Kymera Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kymera Therapeutics and Monte Rosa 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 Monte Rosa Therapeutics are associated (or correlated) with Kymera Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kymera Therapeutics has no effect on the direction of Monte Rosa i.e., Monte Rosa and Kymera Therapeutics go up and down completely randomly.

Pair Corralation between Monte Rosa and Kymera Therapeutics

Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to under-perform the Kymera Therapeutics. In addition to that, Monte Rosa is 1.41 times more volatile than Kymera Therapeutics. It trades about -0.17 of its total potential returns per unit of risk. Kymera Therapeutics is currently generating about 0.05 per unit of volatility. If you would invest  3,640  in Kymera Therapeutics on February 5, 2024 and sell it today you would earn a total of  100.00  from holding Kymera Therapeutics or generate 2.75% return on investment over 90 days.

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

Monte Rosa Therapeutics  vs.  Kymera Therapeutics

Monte Rosa Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monte Rosa Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Monte Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kymera Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kymera Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Kymera Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monte Rosa and Kymera Therapeutics

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

The idea behind Monte Rosa Therapeutics and Kymera Therapeutics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.