Correlation Between Sensei Biotherapeutics and Erasca

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

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

Diversification Opportunities for Sensei Biotherapeutics and Erasca

0.13

Correlation Coefficient

Sensei Biotherapeutics  Erasca

Average diversification

The 3 months correlation between Sensei and Erasca is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sensei Biotherapeutics and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc 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 Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Sensei Biotherapeutics i.e., Sensei Biotherapeutics and Erasca go up and down completely randomly.

Pair Corralation between Sensei Biotherapeutics and Erasca

Given the investment horizon of 90 days Sensei Biotherapeutics is expected to under-perform the Erasca. In addition to that, Sensei Biotherapeutics is 1.53 times more volatile than Erasca Inc. It trades about -0.07 of its total potential returns per unit of risk. Erasca Inc is currently generating about 0.01 per unit of volatility. If you would invest  258.00  in Erasca Inc on September 24, 2024 and sell it today you would lose (4.00) from holding Erasca Inc or give up 1.55% of portfolio value over 90 days.

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

Sensei Biotherapeutics  vs.  Erasca Inc

Sensei Biotherapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sensei Biotherapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Sensei Biotherapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Erasca Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Erasca Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Erasca is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sensei Biotherapeutics and Erasca

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

The idea behind Sensei Biotherapeutics and Erasca Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.