Correlation Between Monte Rosa and Centessa Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Monte Rosa and Centessa Pharmaceuticals 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 Monte Rosa and Centessa Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monte Rosa Therapeutics and Centessa Pharmaceuticals PLC, you can compare the effects of market volatilities on Monte Rosa and Centessa Pharmaceuticals 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 Monte Rosa with a short position of Centessa Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monte Rosa and Centessa Pharmaceuticals.

Diversification Opportunities for Monte Rosa and Centessa Pharmaceuticals

0.67

Correlation Coefficient

Monte Rosa  Centessa Pharmaceuticals

Poor diversification

The 3 months correlation between Monte and Centessa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals and Monte Rosa 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 Monte Rosa Therapeutics are associated (or correlated) with Centessa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centessa Pharmaceuticals has no effect on the direction of Monte Rosa i.e., Monte Rosa and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Monte Rosa and Centessa Pharmaceuticals

Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to under-perform the Centessa Pharmaceuticals. In addition to that, Monte Rosa is 1.26 times more volatile than Centessa Pharmaceuticals PLC. It trades about -0.08 of its total potential returns per unit of risk. Centessa Pharmaceuticals PLC is currently generating about -0.03 per unit of volatility. If you would invest  1,635  in Centessa Pharmaceuticals PLC on December 29, 2024 and sell it today you would lose (184.00) from holding Centessa Pharmaceuticals PLC or give up 11.25% of portfolio value over 90 days.

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

Monte Rosa Therapeutics  vs.  Centessa Pharmaceuticals PLC

Monte Rosa Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monte Rosa Therapeutics 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Monte Rosa and Centessa Pharmaceuticals

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

The idea behind Monte Rosa Therapeutics and Centessa Pharmaceuticals PLC 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.