Correlation Between Candel Therapeutics and Replimune

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

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

Diversification Opportunities for Candel Therapeutics and Replimune

-0.45

Correlation Coefficient

Candel Therapeutics  Replimune

Very good diversification

The 3 months correlation between Candel and Replimune is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Replimune Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Replimune Group 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 Replimune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Replimune Group has no effect on the direction of Candel Therapeutics i.e., Candel Therapeutics and Replimune go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Replimune

Given the investment horizon of 90 days Candel Therapeutics is expected to under-perform the Replimune. But the stock apears to be less risky and, when comparing its historical volatility, Candel Therapeutics is 1.23 times less risky than Replimune. The stock trades about -0.08 of its potential returns per unit of risk. The Replimune Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,044  in Replimune Group on September 4, 2024 and sell it today you would earn a total of  311.00  from holding Replimune Group or generate 29.79% return on investment over 90 days.

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

Candel Therapeutics  vs.  Replimune Group

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.

Replimune Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Replimune Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Replimune disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Candel Therapeutics and Replimune

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

The idea behind Candel Therapeutics and Replimune Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..