Correlation Between Centessa Pharmaceuticals and Catheter Precision

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

Diversification Opportunities for Centessa Pharmaceuticals and Catheter Precision

-0.06

Correlation Coefficient

Centessa Pharmaceuticals  Catheter Precision

Good diversification

The 3 months correlation between Centessa and Catheter is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and Catheter Precision go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and Catheter Precision

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to under-perform the Catheter Precision. But the stock apears to be less risky and, when comparing its historical volatility, Centessa Pharmaceuticals PLC is 1.43 times less risky than Catheter Precision. The stock trades about -0.03 of its potential returns per unit of risk. The Catheter Precision is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Catheter Precision on December 29, 2024 and sell it today you would lose (4.00) from holding Catheter Precision or give up 9.52% of portfolio value over 90 days.

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

Centessa Pharmaceuticals PLC  vs.  Catheter Precision

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.

Catheter Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catheter Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Catheter Precision is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Centessa Pharmaceuticals and Catheter Precision

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

The idea behind Centessa Pharmaceuticals PLC and Catheter Precision 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.