Correlation Between Defence Therapeutics and Enlivex Therapeutics

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

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

Diversification Opportunities for Defence Therapeutics and Enlivex Therapeutics

-0.42

Correlation Coefficient

Defence Therapeutics  Enlivex Therapeutics

Very good diversification

The 3 months correlation between Defence and Enlivex is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Defence Therapeutics and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Defence 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 Defence Therapeutics 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 Defence Therapeutics i.e., Defence Therapeutics and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Defence Therapeutics and Enlivex Therapeutics

Assuming the 90 days horizon Defence Therapeutics is expected to generate 2.03 times more return on investment than Enlivex Therapeutics. However, Defence Therapeutics is 2.03 times more volatile than Enlivex Therapeutics. It trades about 0.18 of its potential returns per unit of risk. Enlivex Therapeutics is currently generating about -0.02 per unit of risk. If you would invest  46.00  in Defence Therapeutics on December 27, 2024 and sell it today you would earn a total of  54.00  from holding Defence Therapeutics or generate 117.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Defence Therapeutics  vs.  Enlivex Therapeutics

Defence Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Defence Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Defence Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Enlivex Therapeutics

Risk-Adjusted Performance

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 latest weak performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Defence Therapeutics and Enlivex Therapeutics

The main advantage of trading using opposite Defence Therapeutics and Enlivex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defence Therapeutics 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 Defence Therapeutics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.