Correlation Between Ikena Oncology and Crinetics Pharmaceuticals

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

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

Diversification Opportunities for Ikena Oncology and Crinetics Pharmaceuticals

0.29

Correlation Coefficient

Ikena Oncology  Crinetics Pharmaceuticals

Modest diversification

The 3 months correlation between Ikena and Crinetics is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ikena Oncology and Crinetics Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crinetics Pharmaceuticals and Ikena Oncology 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 Ikena Oncology are associated (or correlated) with Crinetics Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crinetics Pharmaceuticals has no effect on the direction of Ikena Oncology i.e., Ikena Oncology and Crinetics Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ikena Oncology and Crinetics Pharmaceuticals

Given the investment horizon of 90 days Ikena Oncology is expected to generate 27.84 times less return on investment than Crinetics Pharmaceuticals. But when comparing it to its historical volatility, Ikena Oncology is 2.02 times less risky than Crinetics Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Crinetics Pharmaceuticals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,202  in Crinetics Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of  565.00  from holding Crinetics Pharmaceuticals or generate 10.86% return on investment over 90 days.

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

Ikena Oncology  vs.  Crinetics Pharmaceuticals

Ikena Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ikena Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ikena Oncology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Crinetics Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crinetics Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Crinetics Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ikena Oncology and Crinetics Pharmaceuticals

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

The idea behind Ikena Oncology and Crinetics 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.