Correlation Between Enliven Therapeutics and Gracell Biotechnologies

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

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

Diversification Opportunities for Enliven Therapeutics and Gracell Biotechnologies

0.74

Correlation Coefficient

Enliven Therapeutics  Gracell Biotechnologies

Poor diversification

The 3 months correlation between Enliven and Gracell is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Enliven Therapeutics and Gracell Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gracell Biotechnologies 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 Gracell Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gracell Biotechnologies has no effect on the direction of Enliven Therapeutics i.e., Enliven Therapeutics and Gracell Biotechnologies go up and down completely randomly.

Pair Corralation between Enliven Therapeutics and Gracell Biotechnologies

If you would invest  2,188  in Enliven Therapeutics on August 30, 2024 and sell it today you would earn a total of  353.00  from holding Enliven Therapeutics or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Enliven Therapeutics  vs.  Gracell Biotechnologies

Enliven Therapeutics

Risk-Adjusted Performance

7 of 100

OK

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

Gracell Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gracell Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Gracell Biotechnologies is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Enliven Therapeutics and Gracell Biotechnologies

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

The idea behind Enliven Therapeutics and Gracell Biotechnologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.