Correlation Between Century Therapeutics and Eliem Therapeutics

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

Diversification Opportunities for Century Therapeutics and Eliem Therapeutics

-0.61

Correlation Coefficient

Century Therapeutics  Eliem Therapeutics

Excellent diversification

The 3 months correlation between Century and Eliem is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Century Therapeutics and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem 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 Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Century Therapeutics i.e., Century Therapeutics and Eliem Therapeutics go up and down completely randomly.

Pair Corralation between Century Therapeutics and Eliem Therapeutics

Given the investment horizon of 90 days Century Therapeutics is expected to under-perform the Eliem Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Century Therapeutics is 2.33 times less risky than Eliem Therapeutics. The stock trades about -0.1 of its potential returns per unit of risk. The Eliem Therapeutics is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  475.00  in Eliem Therapeutics on February 13, 2024 and sell it today you would earn a total of  371.00  from holding Eliem Therapeutics or generate 78.11% return on investment over 90 days.

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

Century Therapeutics  vs.  Eliem Therapeutics

Century Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eliem Therapeutics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eliem Therapeutics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eliem Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Century Therapeutics and Eliem Therapeutics

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

The idea behind Century Therapeutics and Eliem Therapeutics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.