Correlation Between Centessa Pharmaceuticals and Lincoln Educational

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

Diversification Opportunities for Centessa Pharmaceuticals and Lincoln Educational

0.02

Correlation Coefficient

Centessa Pharmaceuticals  Lincoln Educational

Significant diversification

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

Pair Corralation between Centessa Pharmaceuticals and Lincoln Educational

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to generate 1.65 times more return on investment than Lincoln Educational. However, Centessa Pharmaceuticals is 1.65 times more volatile than Lincoln Educational Services. It trades about 0.08 of its potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.1 per unit of risk. If you would invest  387.00  in Centessa Pharmaceuticals PLC on December 4, 2024 and sell it today you would earn a total of  1,168  from holding Centessa Pharmaceuticals PLC or generate 301.81% return on investment over 90 days.

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

Centessa Pharmaceuticals PLC  vs.  Lincoln Educational Services

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.

Lincoln Educational

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centessa Pharmaceuticals and Lincoln Educational

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

The idea behind Centessa Pharmaceuticals PLC and Lincoln Educational Services 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.