Correlation Between Roivant Sciences and Keros Therapeutics

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

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

Diversification Opportunities for Roivant Sciences and Keros Therapeutics

0.26

Correlation Coefficient

Roivant Sciences  Keros Therapeutics

Modest diversification

The 3 months correlation between Roivant and Keros is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Roivant Sciences and Keros Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keros Therapeutics and Roivant Sciences 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 Roivant Sciences are associated (or correlated) with Keros Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keros Therapeutics has no effect on the direction of Roivant Sciences i.e., Roivant Sciences and Keros Therapeutics go up and down completely randomly.

Pair Corralation between Roivant Sciences and Keros Therapeutics

If you would invest  5,804  in Keros Therapeutics on September 1, 2024 and sell it today you would lose (30.00) from holding Keros Therapeutics or give up 0.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Roivant Sciences  vs.  Keros Therapeutics

Roivant Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roivant Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Roivant Sciences is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Keros Therapeutics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keros Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Keros Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roivant Sciences and Keros Therapeutics

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

The idea behind Roivant Sciences and Keros Therapeutics 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.