Correlation Between Evaxion Biotech and Sensei Biotherapeutics

Can any of the company-specific risk be diversified away by investing in both Evaxion Biotech and Sensei Biotherapeutics 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 Evaxion Biotech and Sensei Biotherapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evaxion Biotech AS and Sensei Biotherapeutics, you can compare the effects of market volatilities on Evaxion Biotech and Sensei Biotherapeutics 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 Evaxion Biotech with a short position of Sensei Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evaxion Biotech and Sensei Biotherapeutics.

Diversification Opportunities for Evaxion Biotech and Sensei Biotherapeutics

0.15

Correlation Coefficient

Evaxion Biotech  Sensei Biotherapeutics

Average diversification

The 3 months correlation between Evaxion and Sensei is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Evaxion Biotech AS and Sensei Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensei Biotherapeutics and Evaxion Biotech 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 Evaxion Biotech AS are associated (or correlated) with Sensei Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensei Biotherapeutics has no effect on the direction of Evaxion Biotech i.e., Evaxion Biotech and Sensei Biotherapeutics go up and down completely randomly.

Pair Corralation between Evaxion Biotech and Sensei Biotherapeutics

Given the investment horizon of 90 days Evaxion Biotech AS is expected to under-perform the Sensei Biotherapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Evaxion Biotech AS is 2.39 times less risky than Sensei Biotherapeutics. The stock trades about -0.19 of its potential returns per unit of risk. The Sensei Biotherapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  59.00  in Sensei Biotherapeutics on September 5, 2024 and sell it today you would lose (8.00) from holding Sensei Biotherapeutics or give up 13.56% of portfolio value over 90 days.

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

Evaxion Biotech AS  vs.  Sensei Biotherapeutics

Evaxion Biotech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evaxion Biotech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sensei Biotherapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sensei Biotherapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Sensei Biotherapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evaxion Biotech and Sensei Biotherapeutics

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

The idea behind Evaxion Biotech AS and Sensei Biotherapeutics 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.