Correlation Between Eliem Therapeutics and Cell Source

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

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

Diversification Opportunities for Eliem Therapeutics and Cell Source

-0.52

Correlation Coefficient

Eliem Therapeutics  Cell Source

Excellent diversification

The 3 months correlation between Eliem and Cell is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Eliem Therapeutics and Cell Source in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cell Source and Eliem 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 Eliem Therapeutics are associated (or correlated) with Cell Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cell Source has no effect on the direction of Eliem Therapeutics i.e., Eliem Therapeutics and Cell Source go up and down completely randomly.

Pair Corralation between Eliem Therapeutics and Cell Source

Given the investment horizon of 90 days Eliem Therapeutics is expected to under-perform the Cell Source. But the stock apears to be less risky and, when comparing its historical volatility, Eliem Therapeutics is 3.41 times less risky than Cell Source. The stock trades about -0.24 of its potential returns per unit of risk. The Cell Source is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Cell Source on September 2, 2024 and sell it today you would earn a total of  16.00  from holding Cell Source or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Eliem Therapeutics  vs.  Cell Source

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.

Cell Source

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cell Source are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Cell Source unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eliem Therapeutics and Cell Source

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

The idea behind Eliem Therapeutics and Cell Source 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.