Correlation Between Centessa Pharmaceuticals and Oncolytics Biotech

Can any of the company-specific risk be diversified away by investing in both Centessa Pharmaceuticals and Oncolytics Biotech 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 Oncolytics Biotech 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 Oncolytics Biotech, you can compare the effects of market volatilities on Centessa Pharmaceuticals and Oncolytics Biotech 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 Oncolytics Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centessa Pharmaceuticals and Oncolytics Biotech.

Diversification Opportunities for Centessa Pharmaceuticals and Oncolytics Biotech

0.34

Correlation Coefficient

Centessa Pharmaceuticals  Oncolytics Biotech

Weak diversification

The 3 months correlation between Centessa and Oncolytics is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and Oncolytics Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncolytics Biotech 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 Oncolytics Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncolytics Biotech has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and Oncolytics Biotech go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and Oncolytics Biotech

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to generate 1.02 times more return on investment than Oncolytics Biotech. However, Centessa Pharmaceuticals is 1.02 times more volatile than Oncolytics Biotech. It trades about 0.1 of its potential returns per unit of risk. Oncolytics Biotech is currently generating about -0.01 per unit of risk. If you would invest  704.00  in Centessa Pharmaceuticals PLC on August 13, 2024 and sell it today you would earn a total of  946.00  from holding Centessa Pharmaceuticals PLC or generate 134.38% return on investment over 90 days.

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

Centessa Pharmaceuticals PLC  vs.  Oncolytics Biotech

Centessa Pharmaceuticals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centessa Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Oncolytics Biotech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oncolytics Biotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Oncolytics Biotech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centessa Pharmaceuticals and Oncolytics Biotech

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

The idea behind Centessa Pharmaceuticals PLC and Oncolytics Biotech 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.