Correlation Between Nkarta and Atea Pharmaceuticals

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

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

Diversification Opportunities for Nkarta and Atea Pharmaceuticals

0.81

Correlation Coefficient

Nkarta  Atea Pharmaceuticals

Very poor diversification

The 3 months correlation between Nkarta and Atea is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Atea Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea Pharmaceuticals and Nkarta 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 Nkarta Inc are associated (or correlated) with Atea Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea Pharmaceuticals has no effect on the direction of Nkarta i.e., Nkarta and Atea Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nkarta and Atea Pharmaceuticals

Given the investment horizon of 90 days Nkarta Inc is expected to generate 2.47 times more return on investment than Atea Pharmaceuticals. However, Nkarta is 2.47 times more volatile than Atea Pharmaceuticals. It trades about 0.01 of its potential returns per unit of risk. Atea Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest  780.00  in Nkarta Inc on August 29, 2024 and sell it today you would lose (481.00) from holding Nkarta Inc or give up 61.67% of portfolio value over 90 days.

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

Nkarta Inc  vs.  Atea Pharmaceuticals

Nkarta Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nkarta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Atea Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atea Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Nkarta and Atea Pharmaceuticals

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

The idea behind Nkarta Inc and Atea Pharmaceuticals 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.