Correlation Between Candel Therapeutics and Veracyte

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

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

Diversification Opportunities for Candel Therapeutics and Veracyte

-0.66

Correlation Coefficient

Candel Therapeutics  Veracyte

Excellent diversification

The 3 months correlation between Candel and Veracyte is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Veracyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veracyte and Candel 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 Candel Therapeutics are associated (or correlated) with Veracyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veracyte has no effect on the direction of Candel Therapeutics i.e., Candel Therapeutics and Veracyte go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Veracyte

Given the investment horizon of 90 days Candel Therapeutics is expected to generate 5.89 times more return on investment than Veracyte. However, Candel Therapeutics is 5.89 times more volatile than Veracyte. It trades about 0.07 of its potential returns per unit of risk. Veracyte is currently generating about 0.08 per unit of risk. If you would invest  133.00  in Candel Therapeutics on September 8, 2024 and sell it today you would earn a total of  381.00  from holding Candel Therapeutics or generate 286.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.56%
Values	Daily Returns

Candel Therapeutics  vs.  Veracyte

Candel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Candel Therapeutics 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 fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Veracyte

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veracyte are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Veracyte unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Candel Therapeutics and Veracyte

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

The idea behind Candel Therapeutics and Veracyte 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.