Correlation Between Centessa Pharmaceuticals and FACT II

Can any of the company-specific risk be diversified away by investing in both Centessa Pharmaceuticals and FACT II 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 FACT II 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 FACT II Acquisition, you can compare the effects of market volatilities on Centessa Pharmaceuticals and FACT II 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 FACT II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centessa Pharmaceuticals and FACT II.

Diversification Opportunities for Centessa Pharmaceuticals and FACT II

-0.02

Correlation Coefficient

Centessa Pharmaceuticals  FACT II

Good diversification

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

Pair Corralation between Centessa Pharmaceuticals and FACT II

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to under-perform the FACT II. But the stock apears to be less risky and, when comparing its historical volatility, Centessa Pharmaceuticals PLC is 87.06 times less risky than FACT II. The stock trades about -0.06 of its potential returns per unit of risk. The FACT II Acquisition is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  0.00  in FACT II Acquisition on October 11, 2024 and sell it today you would earn a total of  16.00  from holding FACT II Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Centessa Pharmaceuticals PLC  vs.  FACT II Acquisition

Centessa Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Centessa Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

FACT II Acquisition

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, FACT II showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centessa Pharmaceuticals and FACT II

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

The idea behind Centessa Pharmaceuticals PLC and FACT II Acquisition 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.