Correlation Between Kiora Pharmaceuticals and Virax Biolabs

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

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

Diversification Opportunities for Kiora Pharmaceuticals and Virax Biolabs

0.59

Correlation Coefficient

Kiora Pharmaceuticals  Virax Biolabs

Very weak diversification

The 3 months correlation between Kiora and Virax is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kiora Pharmaceuticals and Virax Biolabs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virax Biolabs Group and Kiora Pharmaceuticals 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 Kiora Pharmaceuticals are associated (or correlated) with Virax Biolabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virax Biolabs Group has no effect on the direction of Kiora Pharmaceuticals i.e., Kiora Pharmaceuticals and Virax Biolabs go up and down completely randomly.

Pair Corralation between Kiora Pharmaceuticals and Virax Biolabs

Given the investment horizon of 90 days Kiora Pharmaceuticals is expected to generate 1.78 times less return on investment than Virax Biolabs. But when comparing it to its historical volatility, Kiora Pharmaceuticals is 3.21 times less risky than Virax Biolabs. It trades about 0.13 of its potential returns per unit of risk. Virax Biolabs Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  181.00  in Virax Biolabs Group on August 15, 2024 and sell it today you would earn a total of  13.00  from holding Virax Biolabs Group or generate 7.18% return on investment over 90 days.

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

Kiora Pharmaceuticals  vs.  Virax Biolabs Group

Kiora Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

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

Virax Biolabs Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virax Biolabs Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Virax Biolabs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kiora Pharmaceuticals and Virax Biolabs

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

The idea behind Kiora Pharmaceuticals and Virax Biolabs Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.