Correlation Between Sensei Biotherapeutics and Cue Biopharma

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

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

Diversification Opportunities for Sensei Biotherapeutics and Cue Biopharma

0.05

Correlation Coefficient

Sensei Biotherapeutics  Cue Biopharma

Significant diversification

The 3 months correlation between Sensei and Cue is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sensei Biotherapeutics and Cue Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cue Biopharma and Sensei Biotherapeutics 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 Sensei Biotherapeutics are associated (or correlated) with Cue Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cue Biopharma has no effect on the direction of Sensei Biotherapeutics i.e., Sensei Biotherapeutics and Cue Biopharma go up and down completely randomly.

Pair Corralation between Sensei Biotherapeutics and Cue Biopharma

Given the investment horizon of 90 days Sensei Biotherapeutics is expected to generate 3.0 times less return on investment than Cue Biopharma. In addition to that, Sensei Biotherapeutics is 1.13 times more volatile than Cue Biopharma. It trades about 0.04 of its total potential returns per unit of risk. Cue Biopharma is currently generating about 0.13 per unit of volatility. If you would invest  66.00  in Cue Biopharma on September 2, 2024 and sell it today you would earn a total of  56.00  from holding Cue Biopharma or generate 84.85% return on investment over 90 days.

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

Sensei Biotherapeutics  vs.  Cue Biopharma

Sensei Biotherapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sensei Biotherapeutics are ranked lower than 3 (%) 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.

Cue Biopharma

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cue Biopharma are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Cue Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sensei Biotherapeutics and Cue Biopharma

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

The idea behind Sensei Biotherapeutics and Cue Biopharma 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.