Correlation Between Fennec Pharmaceuticals and Eliem Therapeutics

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

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

Diversification Opportunities for Fennec Pharmaceuticals and Eliem Therapeutics

0.38

Correlation Coefficient

Fennec Pharmaceuticals  Eliem Therapeutics

Weak diversification

The 3 months correlation between Fennec and Eliem is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fennec Pharmaceuticals and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics and Fennec 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 Fennec Pharmaceuticals are associated (or correlated) with Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Fennec Pharmaceuticals i.e., Fennec Pharmaceuticals and Eliem Therapeutics go up and down completely randomly.

Pair Corralation between Fennec Pharmaceuticals and Eliem Therapeutics

Given the investment horizon of 90 days Fennec Pharmaceuticals is expected to under-perform the Eliem Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Fennec Pharmaceuticals is 1.99 times less risky than Eliem Therapeutics. The stock trades about -0.01 of its potential returns per unit of risk. The Eliem Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  255.00  in Eliem Therapeutics on September 2, 2024 and sell it today you would earn a total of  49.00  from holding Eliem Therapeutics or generate 19.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Fennec Pharmaceuticals  vs.  Eliem Therapeutics

Fennec Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fennec Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Fennec Pharmaceuticals exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Fennec Pharmaceuticals and Eliem Therapeutics

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

The idea behind Fennec Pharmaceuticals and Eliem 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.