Correlation Between Centessa Pharmaceuticals and GH Research
Can any of the company-specific risk be diversified away by investing in both Centessa Pharmaceuticals and GH Research 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 GH Research 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 GH Research PLC, you can compare the effects of market volatilities on Centessa Pharmaceuticals and GH Research 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 GH Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centessa Pharmaceuticals and GH Research.
Diversification Opportunities for Centessa Pharmaceuticals and GH Research
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Centessa and GHRS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and GH Research PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GH Research PLC 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 GH Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GH Research PLC has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and GH Research go up and down completely randomly.
Pair Corralation between Centessa Pharmaceuticals and GH Research
Given the investment horizon of 90 days Centessa Pharmaceuticals is expected to generate 1.01 times less return on investment than GH Research. But when comparing it to its historical volatility, Centessa Pharmaceuticals PLC is 1.36 times less risky than GH Research. It trades about 0.18 of its potential returns per unit of risk. GH Research PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 800.00 in GH Research PLC on September 3, 2024 and sell it today you would earn a total of 93.00 from holding GH Research PLC or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centessa Pharmaceuticals PLC vs. GH Research PLC
Performance |
| Timeline |
| Centessa Pharmaceuticals |
| GH Research PLC |
Centessa Pharmaceuticals and GH Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centessa Pharmaceuticals and GH Research
The main advantage of trading using opposite Centessa Pharmaceuticals and GH Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centessa Pharmaceuticals position performs unexpectedly, GH Research 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 GH Research will offset losses from the drop in GH Research's long position.The idea behind Centessa Pharmaceuticals PLC and GH Research 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.
| GH Research vs. DiaMedica Therapeutics | GH Research vs. Lyra Therapeutics | GH Research vs. Centessa Pharmaceuticals PLC |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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