Correlation Between Candel Therapeutics and Forte Biosciences

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

By analyzing existing cross correlation between Candel Therapeutics and Forte Biosciences, you can compare the effects of market volatilities on Candel Therapeutics and Forte Biosciences 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 Forte Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Candel Therapeutics and Forte Biosciences.

Diversification Opportunities for Candel Therapeutics and Forte Biosciences

-0.14

Correlation Coefficient

Candel Therapeutics  Forte Biosciences

Good diversification

The 3 months correlation between Candel and Forte is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Forte Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forte Biosciences 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 Forte Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forte Biosciences has no effect on the direction of Candel Therapeutics i.e., Candel Therapeutics and Forte Biosciences go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Forte Biosciences

Given the investment horizon of 90 days Candel Therapeutics is expected to generate 2.24 times less return on investment than Forte Biosciences. But when comparing it to its historical volatility, Candel Therapeutics is 1.54 times less risky than Forte Biosciences. It trades about 0.22 of its potential returns per unit of risk. Forte Biosciences is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  611.00  in Forte Biosciences on September 17, 2024 and sell it today you would earn a total of  1,704  from holding Forte Biosciences or generate 278.89% return on investment over 90 days.

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

Candel Therapeutics  vs.  Forte Biosciences

Candel Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Candel Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Candel Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Forte Biosciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forte Biosciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Forte Biosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Candel Therapeutics and Forte Biosciences

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

The idea behind Candel Therapeutics and Forte Biosciences 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.