Correlation Between Enliven Therapeutics and Biofrontera

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

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

Diversification Opportunities for Enliven Therapeutics and Biofrontera

-0.33

Correlation Coefficient

Enliven Therapeutics  Biofrontera

Very good diversification

The 3 months correlation between Enliven and Biofrontera is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Enliven Therapeutics and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and Enliven 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 Enliven Therapeutics are associated (or correlated) with Biofrontera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera has no effect on the direction of Enliven Therapeutics i.e., Enliven Therapeutics and Biofrontera go up and down completely randomly.

Pair Corralation between Enliven Therapeutics and Biofrontera

Given the investment horizon of 90 days Enliven Therapeutics is expected to under-perform the Biofrontera. But the stock apears to be less risky and, when comparing its historical volatility, Enliven Therapeutics is 1.3 times less risky than Biofrontera. The stock trades about -0.06 of its potential returns per unit of risk. The Biofrontera is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Biofrontera on December 1, 2024 and sell it today you would lose (2.00) from holding Biofrontera or give up 2.0% of portfolio value over 90 days.

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

Enliven Therapeutics  vs.  Biofrontera

Enliven Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enliven Therapeutics 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Biofrontera

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Biofrontera is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Enliven Therapeutics and Biofrontera

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

The idea behind Enliven Therapeutics and Biofrontera 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.