Correlation Between Centessa Pharmaceuticals and Mind Medicine

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

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

Diversification Opportunities for Centessa Pharmaceuticals and Mind Medicine

0.57

Correlation Coefficient

Centessa Pharmaceuticals  Mind Medicine

Very weak diversification

The 3 months correlation between Centessa and Mind is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and Mind Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Medicine and Centessa Pharmaceuticals 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 Centessa Pharmaceuticals PLC are associated (or correlated) with Mind Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Medicine has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and Mind Medicine go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and Mind Medicine

Given the investment horizon of 90 days Centessa Pharmaceuticals is expected to generate 1.48 times less return on investment than Mind Medicine. But when comparing it to its historical volatility, Centessa Pharmaceuticals PLC is 1.19 times less risky than Mind Medicine. It trades about 0.11 of its potential returns per unit of risk. Mind Medicine is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  580.00  in Mind Medicine on September 3, 2024 and sell it today you would earn a total of  234.00  from holding Mind Medicine or generate 40.34% return on investment over 90 days.

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

Centessa Pharmaceuticals PLC  vs.  Mind Medicine

Centessa Pharmaceuticals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Centessa Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Mind Medicine

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mind Medicine are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Mind Medicine exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centessa Pharmaceuticals and Mind Medicine

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

The idea behind Centessa Pharmaceuticals PLC and Mind Medicine 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.