Correlation Between Candel Therapeutics and Heron Therapeuti

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

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

Diversification Opportunities for Candel Therapeutics and Heron Therapeuti

0.81

Correlation Coefficient

Candel Therapeutics  Heron Therapeuti

Very poor diversification

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

Pair Corralation between Candel Therapeutics and Heron Therapeuti

Given the investment horizon of 90 days Candel Therapeutics is expected to generate 3.44 times more return on investment than Heron Therapeuti. However, Candel Therapeutics is 3.44 times more volatile than Heron Therapeuti. It trades about 0.1 of its potential returns per unit of risk. Heron Therapeuti is currently generating about 0.02 per unit of risk. If you would invest  657.00  in Candel Therapeutics on September 12, 2024 and sell it today you would earn a total of  694.00  from holding Candel Therapeutics or generate 105.63% return on investment over 90 days.

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

Candel Therapeutics  vs.  Heron Therapeuti

Candel Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Candel Therapeutics are ranked lower than 8 (%) 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.

Heron Therapeuti

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heron Therapeuti are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Heron Therapeuti may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Candel Therapeutics and Heron Therapeuti

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

The idea behind Candel Therapeutics and Heron Therapeuti 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.