Correlation Between Design Therapeutics and Sensei Biotherapeutics

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

By analyzing existing cross correlation between Design Therapeutics and Sensei Biotherapeutics, you can compare the effects of market volatilities on Design Therapeutics and Sensei Biotherapeutics 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 Design Therapeutics with a short position of Sensei Biotherapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design Therapeutics and Sensei Biotherapeutics.

Diversification Opportunities for Design Therapeutics and Sensei Biotherapeutics

-0.07

Correlation Coefficient

Design Therapeutics  Sensei Biotherapeutics

Good diversification

The 3 months correlation between Design and Sensei is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and Sensei Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensei Biotherapeutics and Design 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 Design Therapeutics are associated (or correlated) with Sensei Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensei Biotherapeutics has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and Sensei Biotherapeutics go up and down completely randomly.

Pair Corralation between Design Therapeutics and Sensei Biotherapeutics

Given the investment horizon of 90 days Design Therapeutics is expected to generate 1.25 times less return on investment than Sensei Biotherapeutics. But when comparing it to its historical volatility, Design Therapeutics is 2.41 times less risky than Sensei Biotherapeutics. It trades about 0.07 of its potential returns per unit of risk. Sensei Biotherapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Sensei Biotherapeutics on September 23, 2024 and sell it today you would lose (5.00) from holding Sensei Biotherapeutics or give up 10.0% of portfolio value over 90 days.

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

Design Therapeutics  vs.  Sensei Biotherapeutics

Design Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Design Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Design Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Sensei Biotherapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sensei Biotherapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Sensei Biotherapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Design Therapeutics and Sensei Biotherapeutics

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

The idea behind Design Therapeutics and Sensei Biotherapeutics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.