Correlation Between Candel Therapeutics and Entera Bio

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

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

Diversification Opportunities for Candel Therapeutics and Entera Bio

0.79

Correlation Coefficient

Candel Therapeutics  Entera Bio

Poor diversification

The 3 months correlation between Candel and Entera is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Entera Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entera Bio 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 Entera Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entera Bio has no effect on the direction of Candel Therapeutics i.e., Candel Therapeutics and Entera Bio go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Entera Bio

Given the investment horizon of 90 days Candel Therapeutics is expected to under-perform the Entera Bio. In addition to that, Candel Therapeutics is 1.37 times more volatile than Entera Bio. It trades about -0.08 of its total potential returns per unit of risk. Entera Bio is currently generating about -0.04 per unit of volatility. If you would invest  188.00  in Entera Bio on September 4, 2024 and sell it today you would lose (20.00) from holding Entera Bio or give up 10.64% of portfolio value over 90 days.

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

Candel Therapeutics  vs.  Entera Bio

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.

Entera Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entera Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Candel Therapeutics and Entera Bio

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

The idea behind Candel Therapeutics and Entera Bio 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.