Correlation Between Senti Biosciences and Forte Biosciences

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

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

Diversification Opportunities for Senti Biosciences and Forte Biosciences

0.63

Correlation Coefficient

Senti Biosciences  Forte Biosciences

Poor diversification

The 3 months correlation between Senti and Forte is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Senti Biosciences and Forte Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forte Biosciences and Senti Biosciences 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 Senti Biosciences are associated (or correlated) with Forte Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forte Biosciences has no effect on the direction of Senti Biosciences i.e., Senti Biosciences and Forte Biosciences go up and down completely randomly.

Pair Corralation between Senti Biosciences and Forte Biosciences

Given the investment horizon of 90 days Senti Biosciences is expected to generate 0.85 times more return on investment than Forte Biosciences. However, Senti Biosciences is 1.17 times less risky than Forte Biosciences. It trades about 0.01 of its potential returns per unit of risk. Forte Biosciences is currently generating about -0.2 per unit of risk. If you would invest  397.00  in Senti Biosciences on December 20, 2024 and sell it today you would lose (35.00) from holding Senti Biosciences or give up 8.82% of portfolio value over 90 days.

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

Senti Biosciences  vs.  Forte Biosciences

Senti Biosciences

Risk-Adjusted Performance

Very Weak

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

Forte Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forte Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Senti Biosciences and Forte Biosciences

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

The idea behind Senti Biosciences and Forte Biosciences 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.