Correlation Between Eledon Pharmaceuticals and OptiNose

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

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

Diversification Opportunities for Eledon Pharmaceuticals and OptiNose

-0.49

Correlation Coefficient

Eledon Pharmaceuticals  OptiNose

Very good diversification

The 3 months correlation between Eledon and OptiNose is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eledon Pharmaceuticals and OptiNose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiNose and Eledon Pharmaceuticals 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 Eledon Pharmaceuticals are associated (or correlated) with OptiNose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiNose has no effect on the direction of Eledon Pharmaceuticals i.e., Eledon Pharmaceuticals and OptiNose go up and down completely randomly.

Pair Corralation between Eledon Pharmaceuticals and OptiNose

Given the investment horizon of 90 days Eledon Pharmaceuticals is expected to generate 1.11 times more return on investment than OptiNose. However, Eledon Pharmaceuticals is 1.11 times more volatile than OptiNose. It trades about 0.05 of its potential returns per unit of risk. OptiNose is currently generating about -0.03 per unit of risk. If you would invest  241.00  in Eledon Pharmaceuticals on September 5, 2024 and sell it today you would earn a total of  235.00  from holding Eledon Pharmaceuticals or generate 97.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Eledon Pharmaceuticals  vs.  OptiNose

Eledon Pharmaceuticals

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eledon Pharmaceuticals are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Eledon Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

OptiNose

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OptiNose has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting 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 Eledon Pharmaceuticals and OptiNose

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

The idea behind Eledon Pharmaceuticals and OptiNose 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..