Correlation Between ESSA Pharma and Elicio Therapeutics

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

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

Diversification Opportunities for ESSA Pharma and Elicio Therapeutics

-0.44

Correlation Coefficient

ESSA Pharma  Elicio Therapeutics

Very good diversification

The 3 months correlation between ESSA and Elicio is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Pharma and Elicio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elicio Therapeutics and ESSA Pharma 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 ESSA Pharma are associated (or correlated) with Elicio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elicio Therapeutics has no effect on the direction of ESSA Pharma i.e., ESSA Pharma and Elicio Therapeutics go up and down completely randomly.

Pair Corralation between ESSA Pharma and Elicio Therapeutics

Given the investment horizon of 90 days ESSA Pharma is expected to under-perform the Elicio Therapeutics. In addition to that, ESSA Pharma is 2.37 times more volatile than Elicio Therapeutics. It trades about -0.12 of its total potential returns per unit of risk. Elicio Therapeutics is currently generating about 0.01 per unit of volatility. If you would invest  498.00  in Elicio Therapeutics on September 23, 2024 and sell it today you would lose (10.00) from holding Elicio Therapeutics or give up 2.01% of portfolio value over 90 days.

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

ESSA Pharma  vs.  Elicio Therapeutics

ESSA Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESSA Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Elicio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elicio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Elicio Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ESSA Pharma and Elicio Therapeutics

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

The idea behind ESSA Pharma and Elicio 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.