Correlation Between CytomX Therapeutics and Eliem Therapeutics

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

Diversification Opportunities for CytomX Therapeutics and Eliem Therapeutics

0.78

Correlation Coefficient

CytomX Therapeutics  Eliem Therapeutics

Poor diversification

The 3 months correlation between CytomX and Eliem is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CytomX Therapeutics and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics and CytomX 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 CytomX 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 CytomX Therapeutics i.e., CytomX Therapeutics and Eliem Therapeutics go up and down completely randomly.

Pair Corralation between CytomX Therapeutics and Eliem Therapeutics

Given the investment horizon of 90 days CytomX Therapeutics is expected to generate 1.01 times more return on investment than Eliem Therapeutics. However, CytomX Therapeutics is 1.01 times more volatile than Eliem Therapeutics. It trades about 0.2 of its potential returns per unit of risk. Eliem Therapeutics is currently generating about -0.06 per unit of risk. If you would invest  101.00  in CytomX Therapeutics on September 5, 2024 and sell it today you would earn a total of  22.00  from holding CytomX Therapeutics or generate 21.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

CytomX Therapeutics  vs.  Eliem Therapeutics

CytomX Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CytomX Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, CytomX Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eliem Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eliem 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CytomX Therapeutics and Eliem Therapeutics

The main advantage of trading using opposite CytomX Therapeutics and Eliem Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CytomX 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 CytomX 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.