Correlation Between Vor Biopharma and Sensei Biotherapeutics

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

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

Diversification Opportunities for Vor Biopharma and Sensei Biotherapeutics

0.69

Correlation Coefficient

Vor Biopharma  Sensei Biotherapeutics

Poor diversification

The 3 months correlation between Vor and Sensei is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vor Biopharma and Sensei Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensei Biotherapeutics and Vor Biopharma 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 Vor Biopharma are associated (or correlated) with Sensei Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensei Biotherapeutics has no effect on the direction of Vor Biopharma i.e., Vor Biopharma and Sensei Biotherapeutics go up and down completely randomly.

Pair Corralation between Vor Biopharma and Sensei Biotherapeutics

Considering the 90-day investment horizon Vor Biopharma is expected to generate 2.95 times more return on investment than Sensei Biotherapeutics. However, Vor Biopharma is 2.95 times more volatile than Sensei Biotherapeutics. It trades about 0.03 of its potential returns per unit of risk. Sensei Biotherapeutics is currently generating about -0.03 per unit of risk. If you would invest  84.00  in Vor Biopharma on December 26, 2024 and sell it today you would lose (3.00) from holding Vor Biopharma or give up 3.57% of portfolio value over 90 days.

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

Vor Biopharma  vs.  Sensei Biotherapeutics

Vor Biopharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vor Biopharma are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Vor Biopharma reported solid returns over the last few months and may actually be approaching a breakup point.

Sensei Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sensei Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sensei Biotherapeutics is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vor Biopharma and Sensei Biotherapeutics

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

The idea behind Vor Biopharma and Sensei Biotherapeutics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.