Correlation Between Zenith Capital and Enliven Therapeutics

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

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

Diversification Opportunities for Zenith Capital and Enliven Therapeutics

-0.11

Correlation Coefficient

Zenith Capital  Enliven Therapeutics

Good diversification

The 3 months correlation between Zenith and Enliven is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Zenith Capital Corp and Enliven Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enliven Therapeutics and Zenith Capital 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 Zenith Capital Corp are associated (or correlated) with Enliven Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enliven Therapeutics has no effect on the direction of Zenith Capital i.e., Zenith Capital and Enliven Therapeutics go up and down completely randomly.

Pair Corralation between Zenith Capital and Enliven Therapeutics

Assuming the 90 days horizon Zenith Capital Corp is expected to generate 90.85 times more return on investment than Enliven Therapeutics. However, Zenith Capital is 90.85 times more volatile than Enliven Therapeutics. It trades about 0.26 of its potential returns per unit of risk. Enliven Therapeutics is currently generating about 0.06 per unit of risk. If you would invest  11.00  in Zenith Capital Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Zenith Capital Corp or generate 0.0% return on investment over 90 days.

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

Zenith Capital Corp  vs.  Enliven Therapeutics

Zenith Capital Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zenith Capital Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Zenith Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Enliven Therapeutics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enliven Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Enliven Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zenith Capital and Enliven Therapeutics

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

The idea behind Zenith Capital Corp and Enliven 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.