Correlation Between Enlivex Therapeutics and Lineage Cell

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

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

Diversification Opportunities for Enlivex Therapeutics and Lineage Cell

0.12

Correlation Coefficient

Enlivex Therapeutics  Lineage Cell

Average diversification

The 3 months correlation between Enlivex and Lineage is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Enlivex Therapeutics and Lineage Cell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage Cell Therapeutics and Enlivex 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 Enlivex Therapeutics are associated (or correlated) with Lineage Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage Cell Therapeutics has no effect on the direction of Enlivex Therapeutics i.e., Enlivex Therapeutics and Lineage Cell go up and down completely randomly.

Pair Corralation between Enlivex Therapeutics and Lineage Cell

Assuming the 90 days trading horizon Enlivex Therapeutics is expected to under-perform the Lineage Cell. But the stock apears to be less risky and, when comparing its historical volatility, Enlivex Therapeutics is 1.96 times less risky than Lineage Cell. The stock trades about -0.06 of its potential returns per unit of risk. The Lineage Cell Therapeutics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  21,700  in Lineage Cell Therapeutics on December 3, 2024 and sell it today you would lose (2,200) from holding Lineage Cell Therapeutics or give up 10.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.08%
Values	Daily Returns

Enlivex Therapeutics  vs.  Lineage Cell Therapeutics

Enlivex Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enlivex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lineage Cell Therapeutics

Risk-Adjusted Performance

Insignificant

Over the last 90 days Lineage Cell Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lineage Cell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enlivex Therapeutics and Lineage Cell

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

The idea behind Enlivex Therapeutics and Lineage Cell Therapeutics 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.