Correlation Between Kratos Defense and Biotech Medics

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

By analyzing existing cross correlation between Kratos Defense Security and Biotech Medics Ne, you can compare the effects of market volatilities on Kratos Defense and Biotech Medics 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 Kratos Defense with a short position of Biotech Medics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kratos Defense and Biotech Medics.

Diversification Opportunities for Kratos Defense and Biotech Medics

-0.22

Correlation Coefficient

Kratos Defense  Biotech Medics

Very good diversification

The 3 months correlation between Kratos and Biotech is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kratos Defense Security and Biotech Medics Ne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotech Medics Ne and Kratos Defense 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 Kratos Defense Security are associated (or correlated) with Biotech Medics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotech Medics Ne has no effect on the direction of Kratos Defense i.e., Kratos Defense and Biotech Medics go up and down completely randomly.

Pair Corralation between Kratos Defense and Biotech Medics

Given the investment horizon of 90 days Kratos Defense is expected to generate 3.93 times less return on investment than Biotech Medics. But when comparing it to its historical volatility, Kratos Defense Security is 9.51 times less risky than Biotech Medics. It trades about 0.24 of its potential returns per unit of risk. Biotech Medics Ne is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.40  in Biotech Medics Ne on May 3, 2025 and sell it today you would lose (0.20) from holding Biotech Medics Ne or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Kratos Defense Security  vs.  Biotech Medics Ne

Kratos Defense Security

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kratos Defense Security are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kratos Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Biotech Medics Ne

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biotech Medics Ne are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Biotech Medics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kratos Defense and Biotech Medics

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

The idea behind Kratos Defense Security and Biotech Medics Ne 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.