Correlation Between Black Sea and Enlivex Therapeutics

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

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

Diversification Opportunities for Black Sea and Enlivex Therapeutics

-0.31

Correlation Coefficient

Black Sea  Enlivex Therapeutics

Very good diversification

The 3 months correlation between Black and Enlivex is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Black Sea Property and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Black Sea 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 Black Sea Property 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 Black Sea i.e., Black Sea and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Black Sea and Enlivex Therapeutics

Assuming the 90 days trading horizon Black Sea Property is expected to generate 0.96 times more return on investment than Enlivex Therapeutics. However, Black Sea Property is 1.04 times less risky than Enlivex Therapeutics. It trades about -0.02 of its potential returns per unit of risk. Enlivex Therapeutics is currently generating about -0.14 per unit of risk. If you would invest  59,000  in Black Sea Property on September 14, 2024 and sell it today you would lose (4,000) from holding Black Sea Property or give up 6.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.87%
Values	Daily Returns

Black Sea Property  vs.  Enlivex Therapeutics

Black Sea Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Sea Property has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Black Sea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Enlivex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlivex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Black Sea and Enlivex Therapeutics

The main advantage of trading using opposite Black Sea and Enlivex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Sea 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 Black Sea Property 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.