Correlation Between Eledon Pharmaceuticals and Clearside Biomedical

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

By analyzing existing cross correlation between Eledon Pharmaceuticals and Clearside Biomedical, you can compare the effects of market volatilities on Eledon Pharmaceuticals and Clearside Biomedical 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 Clearside Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eledon Pharmaceuticals and Clearside Biomedical.

Diversification Opportunities for Eledon Pharmaceuticals and Clearside Biomedical

-0.49

Correlation Coefficient

Eledon Pharmaceuticals  Clearside Biomedical

Very good diversification

The 3 months correlation between Eledon and Clearside is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eledon Pharmaceuticals and Clearside Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearside Biomedical 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 Clearside Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearside Biomedical has no effect on the direction of Eledon Pharmaceuticals i.e., Eledon Pharmaceuticals and Clearside Biomedical go up and down completely randomly.

Pair Corralation between Eledon Pharmaceuticals and Clearside Biomedical

Given the investment horizon of 90 days Eledon Pharmaceuticals is expected to under-perform the Clearside Biomedical. In addition to that, Eledon Pharmaceuticals is 1.48 times more volatile than Clearside Biomedical. It trades about -0.02 of its total potential returns per unit of risk. Clearside Biomedical is currently generating about 0.05 per unit of volatility. If you would invest  103.00  in Clearside Biomedical on September 3, 2024 and sell it today you would earn a total of  2.00  from holding Clearside Biomedical or generate 1.94% return on investment over 90 days.

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

Eledon Pharmaceuticals  vs.  Clearside Biomedical

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 unsteady fundamental indicators, Eledon Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Clearside Biomedical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clearside Biomedical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Clearside Biomedical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eledon Pharmaceuticals and Clearside Biomedical

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

The idea behind Eledon Pharmaceuticals and Clearside Biomedical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.