Correlation Between Enliven Therapeutics and PolyPid

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

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

Diversification Opportunities for Enliven Therapeutics and PolyPid

-0.25

Correlation Coefficient

Enliven Therapeutics  PolyPid

Very good diversification

The 3 months correlation between Enliven and PolyPid is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Enliven Therapeutics and PolyPid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PolyPid and Enliven 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 Enliven Therapeutics are associated (or correlated) with PolyPid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PolyPid has no effect on the direction of Enliven Therapeutics i.e., Enliven Therapeutics and PolyPid go up and down completely randomly.

Pair Corralation between Enliven Therapeutics and PolyPid

Given the investment horizon of 90 days Enliven Therapeutics is expected to generate 0.78 times more return on investment than PolyPid. However, Enliven Therapeutics is 1.29 times less risky than PolyPid. It trades about 0.07 of its potential returns per unit of risk. PolyPid is currently generating about -0.02 per unit of risk. If you would invest  2,220  in Enliven Therapeutics on September 3, 2024 and sell it today you would earn a total of  223.00  from holding Enliven Therapeutics or generate 10.05% return on investment over 90 days.

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

Enliven Therapeutics  vs.  PolyPid

Enliven Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enliven Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Enliven Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PolyPid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PolyPid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PolyPid is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enliven Therapeutics and PolyPid

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

The idea behind Enliven Therapeutics and PolyPid 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.