Correlation Between Candel Therapeutics and Unity Biotechnology

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

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

Diversification Opportunities for Candel Therapeutics and Unity Biotechnology

-0.2

Correlation Coefficient

Candel Therapeutics  Unity Biotechnology

Good diversification

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

Pair Corralation between Candel Therapeutics and Unity Biotechnology

Given the investment horizon of 90 days Candel Therapeutics is expected to under-perform the Unity Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Candel Therapeutics is 1.64 times less risky than Unity Biotechnology. The stock trades about -0.01 of its potential returns per unit of risk. The Unity Biotechnology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Unity Biotechnology on December 27, 2024 and sell it today you would earn a total of  20.00  from holding Unity Biotechnology or generate 20.0% 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.  Unity Biotechnology

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 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.

Unity Biotechnology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Biotechnology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental drivers, Unity Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Candel Therapeutics and Unity Biotechnology

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

The idea behind Candel Therapeutics and Unity Biotechnology 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.