Correlation Between Day One and Candel Therapeutics

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

By analyzing existing cross correlation between Day One Biopharmaceuticals and Candel Therapeutics, you can compare the effects of market volatilities on Day One and Candel Therapeutics 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 Day One with a short position of Candel Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Day One and Candel Therapeutics.

Diversification Opportunities for Day One and Candel Therapeutics

-0.14

Correlation Coefficient

Day One  Candel Therapeutics

Good diversification

The 3 months correlation between Day and Candel is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Day One Biopharmaceuticals and Candel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Candel Therapeutics and Day One 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 Day One Biopharmaceuticals are associated (or correlated) with Candel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Candel Therapeutics has no effect on the direction of Day One i.e., Day One and Candel Therapeutics go up and down completely randomly.

Pair Corralation between Day One and Candel Therapeutics

Given the investment horizon of 90 days Day One Biopharmaceuticals is expected to under-perform the Candel Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Day One Biopharmaceuticals is 4.69 times less risky than Candel Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Candel Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  728.00  in Candel Therapeutics on September 15, 2024 and sell it today you would lose (53.00) from holding Candel Therapeutics or give up 7.28% of portfolio value over 90 days.

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

Day One Biopharmaceuticals  vs.  Candel Therapeutics

Day One Biopharmaceu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Day One Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Day One is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Candel Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Candel Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, Candel Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Day One and Candel Therapeutics

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

The idea behind Day One Biopharmaceuticals and Candel Therapeutics 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.

Check out your portfolio center.

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.