Correlation Between Mesa Air and Centessa Pharmaceuticals

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

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

Diversification Opportunities for Mesa Air and Centessa Pharmaceuticals

-0.04

Correlation Coefficient

Mesa Air  Centessa Pharmaceuticals

Good diversification

The 3 months correlation between Mesa and Centessa is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals and Mesa Air 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 Mesa Air Group 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 Mesa Air i.e., Mesa Air and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Mesa Air and Centessa Pharmaceuticals

Given the investment horizon of 90 days Mesa Air is expected to generate 2.75 times less return on investment than Centessa Pharmaceuticals. In addition to that, Mesa Air is 1.45 times more volatile than Centessa Pharmaceuticals PLC. It trades about 0.02 of its total potential returns per unit of risk. Centessa Pharmaceuticals PLC is currently generating about 0.1 per unit of volatility. If you would invest  323.00  in Centessa Pharmaceuticals PLC on September 19, 2024 and sell it today you would earn a total of  1,352  from holding Centessa Pharmaceuticals PLC or generate 418.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Mesa Air Group  vs.  Centessa Pharmaceuticals PLC

Mesa Air Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mesa Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mesa Air is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Centessa Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 2 (%) 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 January 2025.

Pair Trading with Mesa Air and Centessa Pharmaceuticals

The main advantage of trading using opposite Mesa Air and Centessa Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air 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 Mesa Air Group 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.