Correlation Between Entera Bio and Equillium

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

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

Diversification Opportunities for Entera Bio and Equillium

0.11

Correlation Coefficient

Entera Bio  Equillium

Average diversification

The 3 months correlation between Entera and Equillium is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Entera Bio and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Entera Bio 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 Entera Bio are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Entera Bio i.e., Entera Bio and Equillium go up and down completely randomly.

Pair Corralation between Entera Bio and Equillium

Given the investment horizon of 90 days Entera Bio is expected to generate 1.05 times less return on investment than Equillium. But when comparing it to its historical volatility, Entera Bio is 1.25 times less risky than Equillium. It trades about 0.06 of its potential returns per unit of risk. Equillium is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Equillium on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Equillium or generate 7.04% return on investment over 90 days.

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

Entera Bio  vs.  Equillium

Entera Bio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entera Bio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Entera Bio showed solid returns over the last few months and may actually be approaching a breakup point.

Equillium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entera Bio and Equillium

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

The idea behind Entera Bio and Equillium 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.