Correlation Between ProKidney Corp and Arcutis Biotherapeutics

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

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

Diversification Opportunities for ProKidney Corp and Arcutis Biotherapeutics

0.79

Correlation Coefficient

ProKidney Corp  Arcutis Biotherapeutics

Poor diversification

The 3 months correlation between ProKidney and Arcutis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ProKidney Corp and Arcutis Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcutis Biotherapeutics and ProKidney Corp 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 ProKidney Corp are associated (or correlated) with Arcutis Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcutis Biotherapeutics has no effect on the direction of ProKidney Corp i.e., ProKidney Corp and Arcutis Biotherapeutics go up and down completely randomly.

Pair Corralation between ProKidney Corp and Arcutis Biotherapeutics

Given the investment horizon of 90 days ProKidney Corp is expected to generate 23.03 times more return on investment than Arcutis Biotherapeutics. However, ProKidney Corp is 23.03 times more volatile than Arcutis Biotherapeutics. It trades about 0.12 of its potential returns per unit of risk. Arcutis Biotherapeutics is currently generating about 0.0 per unit of risk. If you would invest  69.00  in ProKidney Corp on May 6, 2025 and sell it today you would earn a total of  223.50  from holding ProKidney Corp or generate 323.91% return on investment over 90 days.

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

ProKidney Corp  vs.  Arcutis Biotherapeutics

ProKidney Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProKidney Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, ProKidney Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arcutis Biotherapeutics

Risk-Adjusted Performance

Weak

Over the last 90 days Arcutis Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arcutis Biotherapeutics is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProKidney Corp and Arcutis Biotherapeutics

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

The idea behind ProKidney Corp and Arcutis 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.