Correlation Between Candel Therapeutics and Precision BioSciences

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

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

Diversification Opportunities for Candel Therapeutics and Precision BioSciences

0.81

Correlation Coefficient

Candel Therapeutics  Precision BioSciences

Very poor diversification

The 3 months correlation between Candel and Precision is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Precision BioSciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision BioSciences and Candel Therapeutics 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 Candel Therapeutics are associated (or correlated) with Precision BioSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision BioSciences has no effect on the direction of Candel Therapeutics i.e., Candel Therapeutics and Precision BioSciences go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Precision BioSciences

Given the investment horizon of 90 days Candel Therapeutics is expected to generate 1.48 times more return on investment than Precision BioSciences. However, Candel Therapeutics is 1.48 times more volatile than Precision BioSciences. It trades about -0.08 of its potential returns per unit of risk. Precision BioSciences is currently generating about -0.17 per unit of risk. If you would invest  608.00  in Candel Therapeutics on September 4, 2024 and sell it today you would lose (157.00) from holding Candel Therapeutics or give up 25.82% of portfolio value over 90 days.

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

Candel Therapeutics  vs.  Precision BioSciences

Candel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Candel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Precision BioSciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precision BioSciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Candel Therapeutics and Precision BioSciences

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

The idea behind Candel Therapeutics and Precision 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.