Correlation Between Genius and Kala Pharmaceuticals

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

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

Diversification Opportunities for Genius and Kala Pharmaceuticals

0.73

Correlation Coefficient

Genius  Kala Pharmaceuticals

Poor diversification

The 3 months correlation between Genius and Kala is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Genius Group and Kala Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kala Pharmaceuticals and Genius 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 Genius Group are associated (or correlated) with Kala Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kala Pharmaceuticals has no effect on the direction of Genius i.e., Genius and Kala Pharmaceuticals go up and down completely randomly.

Pair Corralation between Genius and Kala Pharmaceuticals

Considering the 90-day investment horizon Genius Group is expected to under-perform the Kala Pharmaceuticals. In addition to that, Genius is 1.04 times more volatile than Kala Pharmaceuticals. It trades about -0.13 of its total potential returns per unit of risk. Kala Pharmaceuticals is currently generating about 0.21 per unit of volatility. If you would invest  528.00  in Kala Pharmaceuticals on May 6, 2025 and sell it today you would earn a total of  222.00  from holding Kala Pharmaceuticals or generate 42.05% return on investment over 90 days.

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

Genius Group  vs.  Kala Pharmaceuticals

Genius Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genius Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Genius unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kala Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kala Pharmaceuticals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent essential indicators, Kala Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genius and Kala Pharmaceuticals

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

The idea behind Genius Group and Kala Pharmaceuticals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.