Correlation Between Eledon Pharmaceuticals and AstraZeneca PLC

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

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

Diversification Opportunities for Eledon Pharmaceuticals and AstraZeneca PLC

-0.83

Correlation Coefficient

Eledon Pharmaceuticals  AstraZeneca PLC

Pay attention - limited upside

The 3 months correlation between Eledon and AstraZeneca is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Eledon Pharmaceuticals and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR and Eledon Pharmaceuticals 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 Eledon Pharmaceuticals are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Eledon Pharmaceuticals i.e., Eledon Pharmaceuticals and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Eledon Pharmaceuticals and AstraZeneca PLC

Given the investment horizon of 90 days Eledon Pharmaceuticals is expected to generate 3.27 times more return on investment than AstraZeneca PLC. However, Eledon Pharmaceuticals is 3.27 times more volatile than AstraZeneca PLC ADR. It trades about 0.19 of its potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about -0.25 per unit of risk. If you would invest  258.00  in Eledon Pharmaceuticals on September 4, 2024 and sell it today you would earn a total of  179.00  from holding Eledon Pharmaceuticals or generate 69.38% return on investment over 90 days.

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

Eledon Pharmaceuticals  vs.  AstraZeneca PLC ADR

Eledon Pharmaceuticals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eledon Pharmaceuticals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Eledon Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

AstraZeneca PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eledon Pharmaceuticals and AstraZeneca PLC

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

The idea behind Eledon Pharmaceuticals and AstraZeneca PLC ADR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.