Correlation Between Lineage Cell and Enlivex Therapeutics

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

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

Diversification Opportunities for Lineage Cell and Enlivex Therapeutics

0.5

Correlation Coefficient

Lineage Cell  Enlivex Therapeutics

Very weak diversification

The 3 months correlation between Lineage and Enlivex is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lineage Cell Therapeutics and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Lineage Cell 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 Lineage Cell Therapeutics 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 Lineage Cell i.e., Lineage Cell and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Lineage Cell and Enlivex Therapeutics

Assuming the 90 days trading horizon Lineage Cell Therapeutics is expected to under-perform the Enlivex Therapeutics. In addition to that, Lineage Cell is 1.49 times more volatile than Enlivex Therapeutics. It trades about -0.14 of its total potential returns per unit of risk. Enlivex Therapeutics is currently generating about -0.14 per unit of volatility. If you would invest  60,540  in Enlivex Therapeutics on September 13, 2024 and sell it today you would lose (15,020) from holding Enlivex Therapeutics or give up 24.81% of portfolio value over 90 days.

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

Lineage Cell Therapeutics  vs.  Enlivex Therapeutics

Lineage Cell Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lineage Cell 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.

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 Lineage Cell and Enlivex Therapeutics

The main advantage of trading using opposite Lineage Cell and Enlivex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lineage Cell 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 Lineage Cell Therapeutics 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.