Correlation Between Senti Biosciences and Monopar Therapeutics

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

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

Diversification Opportunities for Senti Biosciences and Monopar Therapeutics

-0.58

Correlation Coefficient

Senti Biosciences  Monopar Therapeutics

Excellent diversification

The 3 months correlation between Senti and Monopar is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Senti Biosciences and Monopar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monopar Therapeutics 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 Monopar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monopar Therapeutics has no effect on the direction of Senti Biosciences i.e., Senti Biosciences and Monopar Therapeutics go up and down completely randomly.

Pair Corralation between Senti Biosciences and Monopar Therapeutics

Given the investment horizon of 90 days Senti Biosciences is expected to under-perform the Monopar Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Senti Biosciences is 16.97 times less risky than Monopar Therapeutics. The stock trades about -0.04 of its potential returns per unit of risk. The Monopar Therapeutics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  237.00  in Monopar Therapeutics on August 31, 2024 and sell it today you would earn a total of  1,833  from holding Monopar Therapeutics or generate 773.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Senti Biosciences  vs.  Monopar Therapeutics

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.

Monopar Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Senti Biosciences and Monopar Therapeutics

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

The idea behind Senti Biosciences and Monopar 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.