Correlation Between ATI Physical and Ensysce Biosciences

Can any of the company-specific risk be diversified away by investing in both ATI Physical and Ensysce Biosciences 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 ATI Physical and Ensysce Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATI Physical Therapy and Ensysce Biosciences, you can compare the effects of market volatilities on ATI Physical and Ensysce Biosciences 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 ATI Physical with a short position of Ensysce Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATI Physical and Ensysce Biosciences.

Diversification Opportunities for ATI Physical and Ensysce Biosciences

-0.6

Correlation Coefficient

ATI Physical  Ensysce Biosciences

Excellent diversification

The 3 months correlation between ATI and Ensysce is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ATI Physical Therapy and Ensysce Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensysce Biosciences and ATI Physical 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 ATI Physical Therapy are associated (or correlated) with Ensysce Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensysce Biosciences has no effect on the direction of ATI Physical i.e., ATI Physical and Ensysce Biosciences go up and down completely randomly.

Pair Corralation between ATI Physical and Ensysce Biosciences

Given the investment horizon of 90 days ATI Physical Therapy is expected to under-perform the Ensysce Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, ATI Physical Therapy is 2.15 times less risky than Ensysce Biosciences. The stock trades about -0.09 of its potential returns per unit of risk. The Ensysce Biosciences is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,150  in Ensysce Biosciences on September 12, 2024 and sell it today you would lose (2,465) from holding Ensysce Biosciences or give up 78.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.15%
Values	Daily Returns

ATI Physical Therapy  vs.  Ensysce Biosciences

ATI Physical Therapy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATI Physical Therapy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ensysce Biosciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ensysce Biosciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ensysce Biosciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATI Physical and Ensysce Biosciences

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

The idea behind ATI Physical Therapy and Ensysce Biosciences 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.