Correlation Between Enliven Therapeutics and Ensysce Biosciences

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

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

Diversification Opportunities for Enliven Therapeutics and Ensysce Biosciences

0.04

Correlation Coefficient

Enliven Therapeutics  Ensysce Biosciences

Significant diversification

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

Pair Corralation between Enliven Therapeutics and Ensysce Biosciences

Given the investment horizon of 90 days Enliven Therapeutics is expected to generate 11.21 times less return on investment than Ensysce Biosciences. But when comparing it to its historical volatility, Enliven Therapeutics is 8.22 times less risky than Ensysce Biosciences. It trades about 0.07 of its potential returns per unit of risk. Ensysce Biosciences is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Ensysce Biosciences on September 2, 2024 and sell it today you would earn a total of  12.00  from holding Ensysce Biosciences or generate 32.43% return on investment over 90 days.

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

Enliven Therapeutics  vs.  Ensysce Biosciences

Enliven Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enliven Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Enliven Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ensysce Biosciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ensysce Biosciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ensysce Biosciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enliven Therapeutics and Ensysce Biosciences

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

The idea behind Enliven Therapeutics and Ensysce Biosciences 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.