Correlation Between Senti Biosciences and Virax Biolabs

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

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

Diversification Opportunities for Senti Biosciences and Virax Biolabs

-0.05

Correlation Coefficient

Senti Biosciences  Virax Biolabs

Good diversification

The 3 months correlation between Senti and Virax is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Senti Biosciences and Virax Biolabs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virax Biolabs Group 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 Virax Biolabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virax Biolabs Group has no effect on the direction of Senti Biosciences i.e., Senti Biosciences and Virax Biolabs go up and down completely randomly.

Pair Corralation between Senti Biosciences and Virax Biolabs

Given the investment horizon of 90 days Senti Biosciences is expected to generate 5.22 times more return on investment than Virax Biolabs. However, Senti Biosciences is 5.22 times more volatile than Virax Biolabs Group. It trades about 0.1 of its potential returns per unit of risk. Virax Biolabs Group is currently generating about -0.03 per unit of risk. If you would invest  310.00  in Senti Biosciences on September 12, 2024 and sell it today you would earn a total of  252.00  from holding Senti Biosciences or generate 81.29% return on investment over 90 days.

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

Senti Biosciences  vs.  Virax Biolabs Group

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 weak basic indicators, Senti Biosciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Virax Biolabs Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virax Biolabs Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Senti Biosciences and Virax Biolabs

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

The idea behind Senti Biosciences and Virax Biolabs Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.