Correlation Between Candel Therapeutics and Centessa Pharmaceuticals

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

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

Diversification Opportunities for Candel Therapeutics and Centessa Pharmaceuticals

0.3

Correlation Coefficient

Candel Therapeutics  Centessa Pharmaceuticals

Weak diversification

The 3 months correlation between Candel and Centessa is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals and Candel 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 Candel Therapeutics are associated (or correlated) with Centessa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centessa Pharmaceuticals has no effect on the direction of Candel Therapeutics i.e., Candel Therapeutics and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Centessa Pharmaceuticals

Given the investment horizon of 90 days Candel Therapeutics is expected to under-perform the Centessa Pharmaceuticals. In addition to that, Candel Therapeutics is 1.75 times more volatile than Centessa Pharmaceuticals PLC. It trades about -0.04 of its total potential returns per unit of risk. Centessa Pharmaceuticals PLC is currently generating about -0.03 per unit of volatility. If you would invest  1,635  in Centessa Pharmaceuticals PLC on December 29, 2024 and sell it today you would lose (184.00) from holding Centessa Pharmaceuticals PLC or give up 11.25% of portfolio value over 90 days.

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

Candel Therapeutics  vs.  Centessa Pharmaceuticals PLC

Candel Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Candel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Centessa Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centessa Pharmaceuticals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Candel Therapeutics and Centessa Pharmaceuticals

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

The idea behind Candel Therapeutics and Centessa Pharmaceuticals PLC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.