Correlation Between Century Therapeutics and Radware

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

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

Diversification Opportunities for Century Therapeutics and Radware

0.11

Correlation Coefficient

Century Therapeutics  Radware

Average diversification

The 3 months correlation between Century and Radware is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Century Therapeutics and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware and Century Therapeutics 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 Century Therapeutics are associated (or correlated) with Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Century Therapeutics i.e., Century Therapeutics and Radware go up and down completely randomly.

Pair Corralation between Century Therapeutics and Radware

Given the investment horizon of 90 days Century Therapeutics is expected to under-perform the Radware. In addition to that, Century Therapeutics is 2.54 times more volatile than Radware. It trades about -0.12 of its total potential returns per unit of risk. Radware is currently generating about 0.04 per unit of volatility. If you would invest  2,228  in Radware on September 30, 2024 and sell it today you would earn a total of  94.00  from holding Radware or generate 4.22% return on investment over 90 days.

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

Century Therapeutics  vs.  Radware

Century Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Radware

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Radware is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Century Therapeutics and Radware

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

The idea behind Century Therapeutics and Radware 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.