Correlation Between Century Therapeutics and ADC Therapeutics
Can any of the company-specific risk be diversified away by investing in both Century Therapeutics and ADC 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 Century Therapeutics and ADC Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Therapeutics and ADC Therapeutics SA, you can compare the effects of market volatilities on Century Therapeutics and ADC 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 Century Therapeutics with a short position of ADC Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Therapeutics and ADC Therapeutics.
Diversification Opportunities for Century Therapeutics and ADC Therapeutics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and ADC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Century Therapeutics and ADC Therapeutics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADC Therapeutics 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 ADC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADC Therapeutics has no effect on the direction of Century Therapeutics i.e., Century Therapeutics and ADC Therapeutics go up and down completely randomly.
Pair Corralation between Century Therapeutics and ADC Therapeutics
Given the investment horizon of 90 days Century Therapeutics is expected to under-perform the ADC Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Century Therapeutics is 1.8 times less risky than ADC Therapeutics. The stock trades about -0.11 of its potential returns per unit of risk. The ADC Therapeutics SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 273.00 in ADC Therapeutics SA on November 2, 2024 and sell it today you would lose (101.00) from holding ADC Therapeutics SA or give up 37.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Therapeutics vs. ADC Therapeutics SA
Performance |
| Timeline |
| Century Therapeutics |
| ADC Therapeutics |
Century Therapeutics and ADC Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Therapeutics and ADC Therapeutics
The main advantage of trading using opposite Century Therapeutics and ADC Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Therapeutics position performs unexpectedly, ADC 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 ADC Therapeutics will offset losses from the drop in ADC Therapeutics' long position.| Century Therapeutics vs. Edgewise Therapeutics | Century Therapeutics vs. C4 Therapeutics | Century Therapeutics vs. Mineralys Therapeutics, Common | Century Therapeutics vs. Cullinan Oncology LLC |
| ADC Therapeutics vs. Passage Bio | ADC Therapeutics vs. Black Diamond Therapeutics | ADC Therapeutics vs. Alector | ADC Therapeutics vs. Century 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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