Correlation Between Candel Therapeutics and Seres Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Candel Therapeutics and Seres Therapeutics 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 Seres Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Candel Therapeutics and Seres Therapeutics, you can compare the effects of market volatilities on Candel Therapeutics and Seres Therapeutics 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 Seres Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Candel Therapeutics and Seres Therapeutics.

Diversification Opportunities for Candel Therapeutics and Seres Therapeutics

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Candel and Seres is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Seres Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seres Therapeutics 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 Seres Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seres Therapeutics has no effect on the direction of Candel Therapeutics i.e., Candel Therapeutics and Seres Therapeutics go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Seres Therapeutics

Given the investment horizon of 90 days Candel Therapeutics is expected to generate 9.03 times less return on investment than Seres Therapeutics. But when comparing it to its historical volatility, Candel Therapeutics is 1.16 times less risky than Seres Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Seres Therapeutics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Seres Therapeutics on September 12, 2024 and sell it today you would earn a total of  24.40  from holding Seres Therapeutics or generate 35.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Candel Therapeutics  vs.  Seres Therapeutics

 Performance 
       Timeline  
Candel Therapeutics 

Risk-Adjusted Performance

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Weak
 
Strong
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.
Seres Therapeutics 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Seres Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Seres Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Candel Therapeutics and Seres Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Candel Therapeutics and Seres Therapeutics

The main advantage of trading using opposite Candel Therapeutics and Seres Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Candel Therapeutics position performs unexpectedly, Seres Therapeutics 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 Seres Therapeutics will offset losses from the drop in Seres Therapeutics' long position.
The idea behind Candel Therapeutics and Seres Therapeutics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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