Correlation Between Morgan Advanced and Centessa Pharmaceuticals

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

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

Diversification Opportunities for Morgan Advanced and Centessa Pharmaceuticals

-0.51

Correlation Coefficient

Morgan Advanced  Centessa Pharmaceuticals

Excellent diversification

The 3 months correlation between Morgan and Centessa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals and Morgan Advanced 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 Morgan Advanced Materials 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 Morgan Advanced i.e., Morgan Advanced and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Morgan Advanced and Centessa Pharmaceuticals

Assuming the 90 days horizon Morgan Advanced Materials is expected to under-perform the Centessa Pharmaceuticals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Morgan Advanced Materials is 2.06 times less risky than Centessa Pharmaceuticals. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Centessa Pharmaceuticals PLC is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,806  in Centessa Pharmaceuticals PLC on October 8, 2024 and sell it today you would lose (132.00) from holding Centessa Pharmaceuticals PLC or give up 7.31% of portfolio value over 90 days.

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

Morgan Advanced Materials  vs.  Centessa Pharmaceuticals PLC

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Centessa Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Centessa Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Morgan Advanced and Centessa Pharmaceuticals

The main advantage of trading using opposite Morgan Advanced and Centessa Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced 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 Morgan Advanced Materials 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.