Correlation Between C4 Therapeutics and Ventyx Biosciences

Can any of the company-specific risk be diversified away by investing in both C4 Therapeutics and Ventyx 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 C4 Therapeutics and Ventyx Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C4 Therapeutics and Ventyx Biosciences, you can compare the effects of market volatilities on C4 Therapeutics and Ventyx 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 C4 Therapeutics with a short position of Ventyx Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of C4 Therapeutics and Ventyx Biosciences.

Diversification Opportunities for C4 Therapeutics and Ventyx Biosciences

0.02

Correlation Coefficient

C4 Therapeutics  Ventyx Biosciences

Significant diversification

The 3 months correlation between CCCC and Ventyx is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding C4 Therapeutics and Ventyx Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventyx Biosciences and C4 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 C4 Therapeutics are associated (or correlated) with Ventyx Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventyx Biosciences has no effect on the direction of C4 Therapeutics i.e., C4 Therapeutics and Ventyx Biosciences go up and down completely randomly.

Pair Corralation between C4 Therapeutics and Ventyx Biosciences

Given the investment horizon of 90 days C4 Therapeutics is expected to under-perform the Ventyx Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, C4 Therapeutics is 1.19 times less risky than Ventyx Biosciences. The stock trades about -0.13 of its potential returns per unit of risk. The Ventyx Biosciences is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  265.00  in Ventyx Biosciences on September 28, 2024 and sell it today you would lose (31.00) from holding Ventyx Biosciences or give up 11.7% of portfolio value over 90 days.

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

C4 Therapeutics  vs.  Ventyx Biosciences

C4 Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C4 Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ventyx Biosciences

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ventyx Biosciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Ventyx Biosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C4 Therapeutics and Ventyx Biosciences

The main advantage of trading using opposite C4 Therapeutics and Ventyx Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C4 Therapeutics position performs unexpectedly, Ventyx 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 Ventyx Biosciences will offset losses from the drop in Ventyx Biosciences' long position.

The idea behind C4 Therapeutics and Ventyx 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.