Correlation Between Burning Rock and Candel Therapeutics

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

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

Diversification Opportunities for Burning Rock and Candel Therapeutics

0.2

Correlation Coefficient

Burning Rock  Candel Therapeutics

Modest diversification

The 3 months correlation between Burning and Candel is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Burning Rock Biotech and Candel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Candel Therapeutics and Burning Rock 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 Burning Rock Biotech are associated (or correlated) with Candel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Candel Therapeutics has no effect on the direction of Burning Rock i.e., Burning Rock and Candel Therapeutics go up and down completely randomly.

Pair Corralation between Burning Rock and Candel Therapeutics

Considering the 90-day investment horizon Burning Rock Biotech is expected to under-perform the Candel Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Burning Rock Biotech is 1.18 times less risky than Candel Therapeutics. The stock trades about -0.09 of its potential returns per unit of risk. The Candel Therapeutics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  917.00  in Candel Therapeutics on December 26, 2024 and sell it today you would lose (95.00) from holding Candel Therapeutics or give up 10.36% of portfolio value over 90 days.

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

Burning Rock Biotech  vs.  Candel Therapeutics

Burning Rock Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burning Rock Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Candel Therapeutics

Risk-Adjusted Performance

Weak

Over the last 90 days Candel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Candel Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Burning Rock and Candel Therapeutics

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

The idea behind Burning Rock Biotech and Candel 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.