Correlation Between Enliven Therapeutics and Rallybio Corp

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

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

Diversification Opportunities for Enliven Therapeutics and Rallybio Corp

0.71

Correlation Coefficient

Enliven Therapeutics  Rallybio Corp

Poor diversification

The 3 months correlation between Enliven and Rallybio is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Enliven Therapeutics and Rallybio Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rallybio Corp 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 Rallybio Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rallybio Corp has no effect on the direction of Enliven Therapeutics i.e., Enliven Therapeutics and Rallybio Corp go up and down completely randomly.

Pair Corralation between Enliven Therapeutics and Rallybio Corp

Given the investment horizon of 90 days Enliven Therapeutics is expected to generate 0.74 times more return on investment than Rallybio Corp. However, Enliven Therapeutics is 1.36 times less risky than Rallybio Corp. It trades about -0.01 of its potential returns per unit of risk. Rallybio Corp is currently generating about -0.11 per unit of risk. If you would invest  2,239  in Enliven Therapeutics on December 29, 2024 and sell it today you would lose (132.00) from holding Enliven Therapeutics or give up 5.9% of portfolio value over 90 days.

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

Enliven Therapeutics  vs.  Rallybio Corp

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 very healthy basic indicators, Enliven Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Rallybio Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rallybio Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Enliven Therapeutics and Rallybio Corp

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

The idea behind Enliven Therapeutics and Rallybio Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.