Correlation Between Sensei Biotherapeutics and Graphite Bio

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

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

Diversification Opportunities for Sensei Biotherapeutics and Graphite Bio

0.13

Correlation Coefficient

Sensei Biotherapeutics  Graphite Bio

Average diversification

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

Pair Corralation between Sensei Biotherapeutics and Graphite Bio

If you would invest  48.00  in Sensei Biotherapeutics on September 15, 2024 and sell it today you would lose (4.00) from holding Sensei Biotherapeutics or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Sensei Biotherapeutics  vs.  Graphite Bio

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 inconsistent basic indicators, Sensei Biotherapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Graphite Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphite Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Graphite Bio is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sensei Biotherapeutics and Graphite Bio

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

The idea behind Sensei Biotherapeutics and Graphite Bio 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.