Correlation Between Centessa Pharmaceuticals and Dynavax Technologies

Can any of the company-specific risk be diversified away by investing in both Centessa Pharmaceuticals and Dynavax Technologies 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 Dynavax Technologies 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 Dynavax Technologies, you can compare the effects of market volatilities on Centessa Pharmaceuticals and Dynavax Technologies 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 Dynavax Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centessa Pharmaceuticals and Dynavax Technologies.

Diversification Opportunities for Centessa Pharmaceuticals and Dynavax Technologies

-0.1

Correlation Coefficient

Centessa Pharmaceuticals  Dynavax Technologies

Good diversification

The 3 months correlation between Centessa and Dynavax is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Centessa Pharmaceuticals PLC and Dynavax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynavax Technologies 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 Dynavax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynavax Technologies has no effect on the direction of Centessa Pharmaceuticals i.e., Centessa Pharmaceuticals and Dynavax Technologies go up and down completely randomly.

Pair Corralation between Centessa Pharmaceuticals and Dynavax Technologies

Given the investment horizon of 90 days Centessa Pharmaceuticals PLC is expected to under-perform the Dynavax Technologies. In addition to that, Centessa Pharmaceuticals is 2.44 times more volatile than Dynavax Technologies. It trades about -0.14 of its total potential returns per unit of risk. Dynavax Technologies is currently generating about -0.1 per unit of volatility. If you would invest  1,219  in Dynavax Technologies on February 3, 2024 and sell it today you would lose (45.00) from holding Dynavax Technologies or give up 3.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Centessa Pharmaceuticals PLC  vs.  Dynavax Technologies

Centessa Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Centessa Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Dynavax Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynavax Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Centessa Pharmaceuticals and Dynavax Technologies

The main advantage of trading using opposite Centessa Pharmaceuticals and Dynavax Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centessa Pharmaceuticals position performs unexpectedly, Dynavax Technologies 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 Dynavax Technologies will offset losses from the drop in Dynavax Technologies' long position.

The idea behind Centessa Pharmaceuticals PLC and Dynavax Technologies 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.