Correlation Between Seelos Therapeutics and Entera Bio

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Can any of the company-specific risk be diversified away by investing in both Seelos Therapeutics and Entera Bio 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 Seelos Therapeutics and Entera Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seelos Therapeutics and Entera Bio, you can compare the effects of market volatilities on Seelos Therapeutics and Entera Bio 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 Seelos Therapeutics with a short position of Entera Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seelos Therapeutics and Entera Bio.

Diversification Opportunities for Seelos Therapeutics and Entera Bio

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Seelos and Entera is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Seelos Therapeutics and Entera Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entera Bio and Seelos 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 Seelos Therapeutics are associated (or correlated) with Entera Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entera Bio has no effect on the direction of Seelos Therapeutics i.e., Seelos Therapeutics and Entera Bio go up and down completely randomly.

Pair Corralation between Seelos Therapeutics and Entera Bio

Given the investment horizon of 90 days Seelos Therapeutics is expected to under-perform the Entera Bio. In addition to that, Seelos Therapeutics is 4.03 times more volatile than Entera Bio. It trades about -0.23 of its total potential returns per unit of risk. Entera Bio is currently generating about 0.03 per unit of volatility. If you would invest  210.00  in Entera Bio on September 18, 2024 and sell it today you would earn a total of  6.00  from holding Entera Bio or generate 2.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy71.43%
ValuesDaily Returns

Seelos Therapeutics  vs.  Entera Bio

 Performance 
       Timeline  
Seelos Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Seelos Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental 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.
Entera Bio 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Entera Bio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Entera Bio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Seelos Therapeutics and Entera Bio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Seelos Therapeutics and Entera Bio

The main advantage of trading using opposite Seelos Therapeutics and Entera Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seelos Therapeutics position performs unexpectedly, Entera Bio 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 Entera Bio will offset losses from the drop in Entera Bio's long position.
The idea behind Seelos Therapeutics and Entera Bio 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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