Correlation Between BetterLife Pharma and Enlivex Therapeutics

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

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

Diversification Opportunities for BetterLife Pharma and Enlivex Therapeutics

0.64

Correlation Coefficient

BetterLife Pharma  Enlivex Therapeutics

Poor diversification

The 3 months correlation between BetterLife and Enlivex is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BetterLife Pharma and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and BetterLife 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 BetterLife Pharma are associated (or correlated) with Enlivex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlivex Therapeutics has no effect on the direction of BetterLife Pharma i.e., BetterLife Pharma and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between BetterLife Pharma and Enlivex Therapeutics

Assuming the 90 days horizon BetterLife Pharma is expected to generate 2.1 times less return on investment than Enlivex Therapeutics. In addition to that, BetterLife Pharma is 1.6 times more volatile than Enlivex Therapeutics. It trades about 0.04 of its total potential returns per unit of risk. Enlivex Therapeutics is currently generating about 0.12 per unit of volatility. If you would invest  105.00  in Enlivex Therapeutics on September 17, 2024 and sell it today you would earn a total of  15.00  from holding Enlivex Therapeutics or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

BetterLife Pharma  vs.  Enlivex Therapeutics

BetterLife Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetterLife Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BetterLife Pharma is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Enlivex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlivex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BetterLife Pharma and Enlivex Therapeutics

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

The idea behind BetterLife Pharma and Enlivex 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .