Correlation Between Centessa Pharmaceuticals and 539830BX6

Can any of the company-specific risk be diversified away by investing in both Centessa Pharmaceuticals and 539830BX6 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 539830BX6 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 LMT 57 15 NOV 54, you can compare the effects of market volatilities on Centessa Pharmaceuticals and 539830BX6 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 539830BX6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centessa Pharmaceuticals and 539830BX6.

Diversification Opportunities for Centessa Pharmaceuticals and 539830BX6

-0.27

Correlation Coefficient

Centessa Pharmaceuticals  539830BX6

Very good diversification

The 3 months correlation between Centessa and 539830BX6 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and LMT 57 15 NOV 54 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LMT 57 15 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 539830BX6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LMT 57 15 has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and 539830BX6 go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and 539830BX6

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to under-perform the 539830BX6. In addition to that, Centessa Pharmaceuticals is 4.01 times more volatile than LMT 57 15 NOV 54. It trades about -0.04 of its total potential returns per unit of risk. LMT 57 15 NOV 54 is currently generating about 0.23 per unit of volatility. If you would invest  10,434  in LMT 57 15 NOV 54 on September 15, 2024 and sell it today you would earn a total of  470.00  from holding LMT 57 15 NOV 54 or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Centessa Pharmaceuticals PLC  vs.  LMT 57 15 NOV 54

Centessa Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Centessa Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

LMT 57 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LMT 57 15 NOV 54 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 539830BX6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Centessa Pharmaceuticals and 539830BX6

The main advantage of trading using opposite Centessa Pharmaceuticals and 539830BX6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centessa Pharmaceuticals position performs unexpectedly, 539830BX6 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 539830BX6 will offset losses from the drop in 539830BX6's long position.

The idea behind Centessa Pharmaceuticals PLC and LMT 57 15 NOV 54 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.