Correlation Between Inozyme Pharma and Centessa Pharmaceuticals

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

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

Diversification Opportunities for Inozyme Pharma and Centessa Pharmaceuticals

0.69

Correlation Coefficient

Inozyme Pharma  Centessa Pharmaceuticals

Poor diversification

The 3 months correlation between Inozyme and Centessa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Inozyme Pharma and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals and Inozyme Pharma 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 Inozyme Pharma are associated (or correlated) with Centessa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centessa Pharmaceuticals has no effect on the direction of Inozyme Pharma i.e., Inozyme Pharma and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Inozyme Pharma and Centessa Pharmaceuticals

Given the investment horizon of 90 days Inozyme Pharma is expected to generate 8.58 times more return on investment than Centessa Pharmaceuticals. However, Inozyme Pharma is 8.58 times more volatile than Centessa Pharmaceuticals PLC. It trades about 0.17 of its potential returns per unit of risk. Centessa Pharmaceuticals PLC is currently generating about 0.16 per unit of risk. If you would invest  126.00  in Inozyme Pharma on May 6, 2025 and sell it today you would earn a total of  274.00  from holding Inozyme Pharma or generate 217.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	64.52%
Values	Daily Returns

Inozyme Pharma  vs.  Centessa Pharmaceuticals PLC

Inozyme Pharma

Risk-Adjusted Performance

Good

Over the last 90 days Inozyme Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating basic indicators, Inozyme Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Centessa Pharmaceuticals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 12 (%) 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.

Pair Trading with Inozyme Pharma and Centessa Pharmaceuticals

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

The idea behind Inozyme Pharma and Centessa Pharmaceuticals PLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.