Correlation Between Enliven Therapeutics and Stoke Therapeutics

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

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

Diversification Opportunities for Enliven Therapeutics and Stoke Therapeutics

-0.57

Correlation Coefficient

Enliven Therapeutics  Stoke Therapeutics

Excellent diversification

The 3 months correlation between Enliven and Stoke is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Enliven Therapeutics and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke Therapeutics 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 Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of Enliven Therapeutics i.e., Enliven Therapeutics and Stoke Therapeutics go up and down completely randomly.

Pair Corralation between Enliven Therapeutics and Stoke Therapeutics

Given the investment horizon of 90 days Enliven Therapeutics is expected to under-perform the Stoke Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Enliven Therapeutics is 1.14 times less risky than Stoke Therapeutics. The stock trades about -0.18 of its potential returns per unit of risk. The Stoke Therapeutics is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,310  in Stoke Therapeutics on September 3, 2024 and sell it today you would lose (99.00) from holding Stoke Therapeutics or give up 7.56% of portfolio value over 90 days.

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

Enliven Therapeutics  vs.  Stoke Therapeutics

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.

Stoke Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoke Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Enliven Therapeutics and Stoke Therapeutics

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

The idea behind Enliven Therapeutics and Stoke 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.