Correlation Between Senti Biosciences and Arcus Biosciences

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

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

Diversification Opportunities for Senti Biosciences and Arcus Biosciences

0.2

Correlation Coefficient

Senti Biosciences  Arcus Biosciences

Modest diversification

The 3 months correlation between Senti and Arcus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Senti Biosciences and Arcus Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcus Biosciences 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 Arcus Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcus Biosciences has no effect on the direction of Senti Biosciences i.e., Senti Biosciences and Arcus Biosciences go up and down completely randomly.

Pair Corralation between Senti Biosciences and Arcus Biosciences

Given the investment horizon of 90 days Senti Biosciences is expected to generate 13.04 times more return on investment than Arcus Biosciences. However, Senti Biosciences is 13.04 times more volatile than Arcus Biosciences. It trades about 0.1 of its potential returns per unit of risk. Arcus Biosciences is currently generating about 0.02 per unit of risk. If you would invest  292.00  in Senti Biosciences on September 14, 2024 and sell it today you would earn a total of  267.00  from holding Senti Biosciences or generate 91.44% 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.  Arcus Biosciences

Senti Biosciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senti Biosciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Senti Biosciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Arcus Biosciences

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arcus Biosciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Arcus Biosciences is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Senti Biosciences and Arcus Biosciences

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

The idea behind Senti Biosciences and Arcus Biosciences 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.