Correlation Between Unity Biotechnology and Candel Therapeutics

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

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

Diversification Opportunities for Unity Biotechnology and Candel Therapeutics

0.83

Correlation Coefficient

Unity Biotechnology  Candel Therapeutics

Very poor diversification

The 3 months correlation between Unity and Candel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Unity Biotechnology and Candel Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Candel Therapeutics and Unity Biotechnology 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 Unity Biotechnology are associated (or correlated) with Candel Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Candel Therapeutics has no effect on the direction of Unity Biotechnology i.e., Unity Biotechnology and Candel Therapeutics go up and down completely randomly.

Pair Corralation between Unity Biotechnology and Candel Therapeutics

Considering the 90-day investment horizon Unity Biotechnology is expected to under-perform the Candel Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Unity Biotechnology is 3.65 times less risky than Candel Therapeutics. The stock trades about -0.1 of its potential returns per unit of risk. The Candel Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  657.00  in Candel Therapeutics on September 12, 2024 and sell it today you would earn a total of  118.00  from holding Candel Therapeutics or generate 17.96% return on investment over 90 days.

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

Unity Biotechnology  vs.  Candel Therapeutics

Unity Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Candel Therapeutics

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Candel Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Candel Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Biotechnology and Candel Therapeutics

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

The idea behind Unity Biotechnology and Candel Therapeutics 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.