Correlation Between Adagene and Senti Biosciences

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

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

Diversification Opportunities for Adagene and Senti Biosciences

0.22

Correlation Coefficient

Adagene  Senti Biosciences

Modest diversification

The 3 months correlation between Adagene and Senti is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Adagene and Senti Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senti Biosciences and Adagene 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 Adagene are associated (or correlated) with Senti Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senti Biosciences has no effect on the direction of Adagene i.e., Adagene and Senti Biosciences go up and down completely randomly.

Pair Corralation between Adagene and Senti Biosciences

Given the investment horizon of 90 days Adagene is expected to under-perform the Senti Biosciences. In addition to that, Adagene is 1.64 times more volatile than Senti Biosciences. It trades about -0.22 of its total potential returns per unit of risk. Senti Biosciences is currently generating about 0.02 per unit of volatility. If you would invest  216.00  in Senti Biosciences on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Senti Biosciences or generate 0.0% return on investment over 90 days.

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

Adagene  vs.  Senti Biosciences

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Senti Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senti Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Adagene and Senti Biosciences

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

The idea behind Adagene and Senti 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.