Correlation Between Century Therapeutics and Ambrx Biopharma

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

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

Diversification Opportunities for Century Therapeutics and Ambrx Biopharma

-0.45

Correlation Coefficient

Century Therapeutics  Ambrx Biopharma

Very good diversification

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

Pair Corralation between Century Therapeutics and Ambrx Biopharma

Given the investment horizon of 90 days Century Therapeutics is expected to under-perform the Ambrx Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Century Therapeutics is 2.4 times less risky than Ambrx Biopharma. The stock trades about -0.03 of its potential returns per unit of risk. The Ambrx Biopharma American is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Ambrx Biopharma American on September 30, 2024 and sell it today you would earn a total of  1,361  from holding Ambrx Biopharma American or generate 641.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	27.36%
Values	Daily Returns

Century Therapeutics  vs.  Ambrx Biopharma American

Century Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ambrx Biopharma American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambrx Biopharma American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ambrx Biopharma is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Century Therapeutics and Ambrx Biopharma

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

The idea behind Century Therapeutics and Ambrx Biopharma American 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.