Correlation Between Centessa Pharmaceuticals and Conduit Pharmaceuticals

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

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

Diversification Opportunities for Centessa Pharmaceuticals and Conduit Pharmaceuticals

0.21

Correlation Coefficient

Centessa Pharmaceuticals  Conduit Pharmaceuticals

Modest diversification

The 3 months correlation between Centessa and Conduit is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and Conduit Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conduit Pharmaceuticals and Centessa Pharmaceuticals 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 Centessa Pharmaceuticals PLC are associated (or correlated) with Conduit Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conduit Pharmaceuticals has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and Conduit Pharmaceuticals go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and Conduit Pharmaceuticals

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to under-perform the Conduit Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Centessa Pharmaceuticals PLC is 4.41 times less risky than Conduit Pharmaceuticals. The stock trades about -0.03 of its potential returns per unit of risk. The Conduit Pharmaceuticals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.65  in Conduit Pharmaceuticals on December 30, 2024 and sell it today you would earn a total of  0.42  from holding Conduit Pharmaceuticals or generate 64.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.48%
Values	Daily Returns

Centessa Pharmaceuticals PLC  vs.  Conduit Pharmaceuticals

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.

Conduit Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conduit Pharmaceuticals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Conduit Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centessa Pharmaceuticals and Conduit Pharmaceuticals

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

The idea behind Centessa Pharmaceuticals PLC and Conduit Pharmaceuticals 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.