Correlation Between Senti Biosciences and Adagene

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

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

Diversification Opportunities for Senti Biosciences and Adagene

0.24

Correlation Coefficient

Senti Biosciences  Adagene

Modest diversification

The 3 months correlation between Senti and Adagene is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Senti Biosciences and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Senti Biosciences 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 Senti Biosciences are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Senti Biosciences i.e., Senti Biosciences and Adagene go up and down completely randomly.

Pair Corralation between Senti Biosciences and Adagene

Given the investment horizon of 90 days Senti Biosciences is expected to generate 0.61 times more return on investment than Adagene. However, Senti Biosciences is 1.64 times less risky than Adagene. It trades about 0.02 of its potential returns per unit of risk. Adagene is currently generating about -0.22 per unit of risk. If you would invest  216.00  in Senti Biosciences on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Senti Biosciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Senti Biosciences  vs.  Adagene

Senti Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senti Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Senti Biosciences and Adagene

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

The idea behind Senti Biosciences and Adagene 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.