Correlation Between Ikena Oncology and Century Therapeutics

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

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

Diversification Opportunities for Ikena Oncology and Century Therapeutics

-0.12

Correlation Coefficient

Ikena Oncology  Century Therapeutics

Good diversification

The 3 months correlation between Ikena and Century is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ikena Oncology and Century Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Therapeutics and Ikena Oncology 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 Ikena Oncology are associated (or correlated) with Century Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Therapeutics has no effect on the direction of Ikena Oncology i.e., Ikena Oncology and Century Therapeutics go up and down completely randomly.

Pair Corralation between Ikena Oncology and Century Therapeutics

Given the investment horizon of 90 days Ikena Oncology is expected to generate 4.57 times less return on investment than Century Therapeutics. But when comparing it to its historical volatility, Ikena Oncology is 4.22 times less risky than Century Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Century Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  164.00  in Century Therapeutics on September 1, 2024 and sell it today you would earn a total of  8.00  from holding Century Therapeutics or generate 4.88% return on investment over 90 days.

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

Ikena Oncology  vs.  Century Therapeutics

Ikena Oncology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ikena Oncology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ikena Oncology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Century Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Century Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Century Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ikena Oncology and Century Therapeutics

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

The idea behind Ikena Oncology and Century Therapeutics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.