Correlation Between Eledon Pharmaceuticals and Titan Pharmaceuticals

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

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

Diversification Opportunities for Eledon Pharmaceuticals and Titan Pharmaceuticals

0.04

Correlation Coefficient

Eledon Pharmaceuticals  Titan Pharmaceuticals

Significant diversification

The 3 months correlation between Eledon and Titan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Eledon Pharmaceuticals and Titan Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Pharmaceuticals 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 Titan Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Pharmaceuticals has no effect on the direction of Eledon Pharmaceuticals i.e., Eledon Pharmaceuticals and Titan Pharmaceuticals go up and down completely randomly.

Pair Corralation between Eledon Pharmaceuticals and Titan Pharmaceuticals

Given the investment horizon of 90 days Eledon Pharmaceuticals is expected to generate 0.74 times more return on investment than Titan Pharmaceuticals. However, Eledon Pharmaceuticals is 1.35 times less risky than Titan Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Titan Pharmaceuticals 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	Insignificant
Accuracy	98.99%
Values	Daily Returns

Eledon Pharmaceuticals  vs.  Titan Pharmaceuticals

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.

Titan Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Titan Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eledon Pharmaceuticals and Titan Pharmaceuticals

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

The idea behind Eledon Pharmaceuticals and Titan Pharmaceuticals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.