Correlation Between Eledon Pharmaceuticals and Simulations Plus

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

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

Diversification Opportunities for Eledon Pharmaceuticals and Simulations Plus

0.48

Correlation Coefficient

Eledon Pharmaceuticals  Simulations Plus

Very weak diversification

The 3 months correlation between Eledon and Simulations is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eledon Pharmaceuticals and Simulations Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simulations Plus 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 Simulations Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simulations Plus has no effect on the direction of Eledon Pharmaceuticals i.e., Eledon Pharmaceuticals and Simulations Plus go up and down completely randomly.

Pair Corralation between Eledon Pharmaceuticals and Simulations Plus

Given the investment horizon of 90 days Eledon Pharmaceuticals is expected to generate 1.83 times more return on investment than Simulations Plus. However, Eledon Pharmaceuticals is 1.83 times more volatile than Simulations Plus. It trades about 0.05 of its potential returns per unit of risk. Simulations Plus is currently generating about -0.01 per unit of risk. If you would invest  224.00  in Eledon Pharmaceuticals on December 2, 2024 and sell it today you would earn a total of  191.00  from holding Eledon Pharmaceuticals or generate 85.27% return on investment over 90 days.

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

Eledon Pharmaceuticals  vs.  Simulations Plus

Eledon Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eledon Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Eledon Pharmaceuticals is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Simulations Plus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simulations Plus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's essential indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Eledon Pharmaceuticals and Simulations Plus

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

The idea behind Eledon Pharmaceuticals and Simulations Plus 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.

Check out your portfolio center.

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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.