Correlation Between Nkarta and Senti Biosciences
Can any of the company-specific risk be diversified away by investing in both Nkarta and Senti Biosciences 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 Nkarta and Senti Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nkarta Inc and Senti Biosciences, you can compare the effects of market volatilities on Nkarta and Senti Biosciences 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 Nkarta with a short position of Senti Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nkarta and Senti Biosciences.
Diversification Opportunities for Nkarta and Senti Biosciences
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nkarta and Senti is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nkarta Inc and Senti Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senti Biosciences and Nkarta 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 Nkarta Inc are associated (or correlated) with Senti Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senti Biosciences has no effect on the direction of Nkarta i.e., Nkarta and Senti Biosciences go up and down completely randomly.
Pair Corralation between Nkarta and Senti Biosciences
Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Senti Biosciences. In addition to that, Nkarta is 1.62 times more volatile than Senti Biosciences. It trades about -0.08 of its total potential returns per unit of risk. Senti Biosciences is currently generating about -0.03 per unit of volatility. If you would invest 222.00 in Senti Biosciences on August 30, 2024 and sell it today you would lose (8.00) from holding Senti Biosciences or give up 3.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nkarta Inc vs. Senti Biosciences
Performance |
| Timeline |
| Nkarta Inc |
| Senti Biosciences |
Nkarta and Senti Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nkarta and Senti Biosciences
The main advantage of trading using opposite Nkarta and Senti Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nkarta position performs unexpectedly, Senti Biosciences 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 Senti Biosciences will offset losses from the drop in Senti Biosciences' long position.The idea behind Nkarta Inc and Senti Biosciences 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.| Senti Biosciences vs. Cadrenal Therapeutics, Common | Senti Biosciences vs. Foghorn Therapeutics | Senti Biosciences vs. Quoin Pharmaceuticals Ltd | Senti Biosciences vs. SAB Biotherapeutics |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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