Correlation Between Centessa Pharmaceuticals and Global Star

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

By analyzing existing cross correlation between Centessa Pharmaceuticals PLC and Global Star Acquisition, you can compare the effects of market volatilities on Centessa Pharmaceuticals and Global Star 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 Centessa Pharmaceuticals with a short position of Global Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centessa Pharmaceuticals and Global Star.

Diversification Opportunities for Centessa Pharmaceuticals and Global Star

0.38

Correlation Coefficient

Centessa Pharmaceuticals  Global Star

Weak diversification

The 3 months correlation between Centessa and Global is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and Global Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Star Acquisition and Centessa Pharmaceuticals 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 Centessa Pharmaceuticals PLC are associated (or correlated) with Global Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Star Acquisition has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and Global Star go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and Global Star

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to generate 10.02 times more return on investment than Global Star. However, Centessa Pharmaceuticals is 10.02 times more volatile than Global Star Acquisition. It trades about 0.08 of its potential returns per unit of risk. Global Star Acquisition is currently generating about -0.02 per unit of risk. If you would invest  1,463  in Centessa Pharmaceuticals PLC on September 4, 2024 and sell it today you would earn a total of  232.00  from holding Centessa Pharmaceuticals PLC or generate 15.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Centessa Pharmaceuticals PLC  vs.  Global Star Acquisition

Centessa Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Centessa Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Global Star Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Star Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global Star is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Centessa Pharmaceuticals and Global Star

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

The idea behind Centessa Pharmaceuticals PLC and Global Star Acquisition 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.