Correlation Between Protagonist Therapeutics and Kura Oncology

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

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

Diversification Opportunities for Protagonist Therapeutics and Kura Oncology

0.74

Correlation Coefficient

Protagonist Therapeutics  Kura Oncology

Poor diversification

The 3 months correlation between Protagonist and Kura is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Protagonist Therapeutics and Kura Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Oncology and Protagonist 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 Protagonist Therapeutics are associated (or correlated) with Kura Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Oncology has no effect on the direction of Protagonist Therapeutics i.e., Protagonist Therapeutics and Kura Oncology go up and down completely randomly.

Pair Corralation between Protagonist Therapeutics and Kura Oncology

Given the investment horizon of 90 days Protagonist Therapeutics is expected to generate 1.39 times more return on investment than Kura Oncology. However, Protagonist Therapeutics is 1.39 times more volatile than Kura Oncology. It trades about 0.29 of its potential returns per unit of risk. Kura Oncology is currently generating about 0.28 per unit of risk. If you would invest  2,658  in Protagonist Therapeutics on February 15, 2024 and sell it today you would earn a total of  535.50  from holding Protagonist Therapeutics or generate 20.15% return on investment over 90 days.

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

Protagonist Therapeutics  vs.  Kura Oncology

Protagonist Therapeutics

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Protagonist Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Protagonist Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Kura Oncology

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kura Oncology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kura Oncology may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Protagonist Therapeutics and Kura Oncology

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

The idea behind Protagonist Therapeutics and Kura Oncology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..