Correlation Between Centessa Pharmaceuticals and CONSTELLATION

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

Diversification Opportunities for Centessa Pharmaceuticals and CONSTELLATION

0.44

Correlation Coefficient

Centessa Pharmaceuticals  CONSTELLATION

Very weak diversification

The 3 months correlation between Centessa and CONSTELLATION is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and CONSTELLATION ENERGY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION ENERGY 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 CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION ENERGY has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and CONSTELLATION go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and CONSTELLATION

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to generate 3.07 times more return on investment than CONSTELLATION. However, Centessa Pharmaceuticals is 3.07 times more volatile than CONSTELLATION ENERGY GROUP. It trades about 0.08 of its potential returns per unit of risk. CONSTELLATION ENERGY GROUP is currently generating about -0.01 per unit of risk. If you would invest  381.00  in Centessa Pharmaceuticals PLC on October 21, 2024 and sell it today you would earn a total of  1,135  from holding Centessa Pharmaceuticals PLC or generate 297.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.19%
Values	Daily Returns

Centessa Pharmaceuticals PLC  vs.  CONSTELLATION ENERGY GROUP

Centessa Pharmaceuticals

Risk-Adjusted Performance

0 of 100

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 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.

CONSTELLATION ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION ENERGY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for CONSTELLATION ENERGY GROUP investors.

Pair Trading with Centessa Pharmaceuticals and CONSTELLATION

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

The idea behind Centessa Pharmaceuticals PLC and CONSTELLATION ENERGY GROUP 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.