Correlation Between Entheon Biomedical and Allient

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

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

Diversification Opportunities for Entheon Biomedical and Allient

0.4

Correlation Coefficient

Entheon Biomedical  Allient

Very weak diversification

The 3 months correlation between Entheon and Allient is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Entheon Biomedical Corp and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Entheon Biomedical 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 Entheon Biomedical Corp are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Entheon Biomedical i.e., Entheon Biomedical and Allient go up and down completely randomly.

Pair Corralation between Entheon Biomedical and Allient

Assuming the 90 days horizon Entheon Biomedical Corp is expected to generate 5.89 times more return on investment than Allient. However, Entheon Biomedical is 5.89 times more volatile than Allient. It trades about 0.16 of its potential returns per unit of risk. Allient is currently generating about -0.1 per unit of risk. If you would invest  9.20  in Entheon Biomedical Corp on September 26, 2024 and sell it today you would earn a total of  2.80  from holding Entheon Biomedical Corp or generate 30.43% return on investment over 90 days.

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

Entheon Biomedical Corp  vs.  Allient

Entheon Biomedical Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entheon Biomedical Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, Entheon Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Allient

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entheon Biomedical and Allient

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

The idea behind Entheon Biomedical Corp and Allient 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.