Correlation Between RenaissanceRe Holdings and C4 TherapeuticsInc

Can any of the company-specific risk be diversified away by investing in both RenaissanceRe Holdings and C4 TherapeuticsInc 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 RenaissanceRe Holdings and C4 TherapeuticsInc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RenaissanceRe Holdings and C4 TherapeuticsInc, you can compare the effects of market volatilities on RenaissanceRe Holdings and C4 TherapeuticsInc 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 RenaissanceRe Holdings with a short position of C4 TherapeuticsInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of RenaissanceRe Holdings and C4 TherapeuticsInc.

Diversification Opportunities for RenaissanceRe Holdings and C4 TherapeuticsInc

0.46

Correlation Coefficient

RenaissanceRe Holdings  C4 TherapeuticsInc

Very weak diversification

The 3 months correlation between RenaissanceRe and CCCC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding RenaissanceRe Holdings and C4 TherapeuticsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C4 TherapeuticsInc and RenaissanceRe Holdings 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 RenaissanceRe Holdings are associated (or correlated) with C4 TherapeuticsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C4 TherapeuticsInc has no effect on the direction of RenaissanceRe Holdings i.e., RenaissanceRe Holdings and C4 TherapeuticsInc go up and down completely randomly.

Pair Corralation between RenaissanceRe Holdings and C4 TherapeuticsInc

Assuming the 90 days trading horizon RenaissanceRe Holdings is expected to generate 0.27 times more return on investment than C4 TherapeuticsInc. However, RenaissanceRe Holdings is 3.64 times less risky than C4 TherapeuticsInc. It trades about -0.35 of its potential returns per unit of risk. C4 TherapeuticsInc is currently generating about -0.37 per unit of risk. If you would invest  2,465  in RenaissanceRe Holdings on January 30, 2024 and sell it today you would lose (150.00) from holding RenaissanceRe Holdings or give up 6.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

RenaissanceRe Holdings  vs.  C4 TherapeuticsInc

RenaissanceRe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RenaissanceRe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RenaissanceRe Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

C4 TherapeuticsInc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C4 TherapeuticsInc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, C4 TherapeuticsInc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RenaissanceRe Holdings and C4 TherapeuticsInc

The main advantage of trading using opposite RenaissanceRe Holdings and C4 TherapeuticsInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenaissanceRe Holdings position performs unexpectedly, C4 TherapeuticsInc 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 C4 TherapeuticsInc will offset losses from the drop in C4 TherapeuticsInc's long position.

The idea behind RenaissanceRe Holdings and C4 TherapeuticsInc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.