Correlation Between Keros Therapeutics and Bolt Biotherapeutics

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

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

Diversification Opportunities for Keros Therapeutics and Bolt Biotherapeutics

-0.67

Correlation Coefficient

Keros Therapeutics  Bolt Biotherapeutics

Excellent diversification

The 3 months correlation between Keros and Bolt is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Keros Therapeutics and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics and Keros Therapeutics 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 Keros Therapeutics are associated (or correlated) with Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of Keros Therapeutics i.e., Keros Therapeutics and Bolt Biotherapeutics go up and down completely randomly.

Pair Corralation between Keros Therapeutics and Bolt Biotherapeutics

Given the investment horizon of 90 days Keros Therapeutics is expected to generate 1.35 times more return on investment than Bolt Biotherapeutics. However, Keros Therapeutics is 1.35 times more volatile than Bolt Biotherapeutics. It trades about 0.14 of its potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.1 per unit of risk. If you would invest  4,857  in Keros Therapeutics on July 21, 2024 and sell it today you would earn a total of  1,268  from holding Keros Therapeutics or generate 26.11% return on investment over 90 days.

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

Keros Therapeutics  vs.  Bolt Biotherapeutics

Keros Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Keros Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Keros Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Keros Therapeutics and Bolt Biotherapeutics

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

The idea behind Keros Therapeutics and Bolt Biotherapeutics 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.