Correlation Between Century Therapeutics and Adagene
Can any of the company-specific risk be diversified away by investing in both Century Therapeutics and Adagene 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 Century Therapeutics and Adagene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Therapeutics and Adagene, you can compare the effects of market volatilities on Century Therapeutics and Adagene 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 Century Therapeutics with a short position of Adagene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Therapeutics and Adagene.
Diversification Opportunities for Century Therapeutics and Adagene
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Adagene is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Century Therapeutics and Adagene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adagene and Century 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 Century Therapeutics are associated (or correlated) with Adagene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adagene has no effect on the direction of Century Therapeutics i.e., Century Therapeutics and Adagene go up and down completely randomly.
Pair Corralation between Century Therapeutics and Adagene
Given the investment horizon of 90 days Century Therapeutics is expected to under-perform the Adagene. But the stock apears to be less risky and, when comparing its historical volatility, Century Therapeutics is 1.16 times less risky than Adagene. The stock trades about -0.05 of its potential returns per unit of risk. The Adagene is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 159.00 in Adagene on December 6, 2024 and sell it today you would earn a total of 51.00 from holding Adagene or generate 32.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Therapeutics vs. Adagene
Performance |
| Timeline |
| Century Therapeutics |
| Adagene |
Century Therapeutics and Adagene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Therapeutics and Adagene
The main advantage of trading using opposite Century Therapeutics and Adagene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Therapeutics position performs unexpectedly, Adagene 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 Adagene will offset losses from the drop in Adagene's long position.| Century Therapeutics vs. Edgewise Therapeutics | Century Therapeutics vs. C4 Therapeutics | Century Therapeutics vs. Mineralys Therapeutics, Common | Century Therapeutics vs. Cullinan Oncology LLC |
| Adagene vs. Aerovate Therapeutics | Adagene vs. Acrivon Therapeutics, Common | Adagene vs. Rezolute | Adagene vs. AN2 Therapeutics |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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