Correlation Between Equillium and Enlivex Therapeutics

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

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

Diversification Opportunities for Equillium and Enlivex Therapeutics

0.85

Correlation Coefficient

Equillium  Enlivex Therapeutics

Very poor diversification

The 12 months correlation between Equillium and Enlivex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Equillium 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 Equillium are associated (or correlated) with Enlivex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlivex Therapeutics has no effect on the direction of Equillium i.e., Equillium and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Equillium and Enlivex Therapeutics

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Enlivex Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Equillium is 1.59 times less risky than Enlivex Therapeutics. The stock trades about -0.22 of its potential returns per unit of risk. The Enlivex Therapeutics is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  148.00  in Enlivex Therapeutics on March 18, 2024 and sell it today you would earn a total of  109.00  from holding Enlivex Therapeutics or generate 73.65% return on investment over 90 days.

Time Period	12 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Equillium  vs.  Enlivex Therapeutics

Equillium

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Enlivex Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enlivex Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Enlivex Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and Enlivex Therapeutics

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

The idea behind Equillium and Enlivex 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.