Correlation Between Enzo Biochem and Definitive Healthcare

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

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

Diversification Opportunities for Enzo Biochem and Definitive Healthcare

0.29

Correlation Coefficient

Enzo Biochem  Definitive Healthcare

Modest diversification

The 3 months correlation between Enzo and Definitive is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Enzo Biochem and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare and Enzo Biochem 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 Enzo Biochem are associated (or correlated) with Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of Enzo Biochem i.e., Enzo Biochem and Definitive Healthcare go up and down completely randomly.

Pair Corralation between Enzo Biochem and Definitive Healthcare

Considering the 90-day investment horizon Enzo Biochem is expected to generate 1.37 times more return on investment than Definitive Healthcare. However, Enzo Biochem is 1.37 times more volatile than Definitive Healthcare Corp. It trades about 0.0 of its potential returns per unit of risk. Definitive Healthcare Corp is currently generating about -0.04 per unit of risk. If you would invest  131.00  in Enzo Biochem on September 28, 2024 and sell it today you would lose (60.00) from holding Enzo Biochem or give up 45.8% of portfolio value over 90 days.

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

Enzo Biochem  vs.  Definitive Healthcare Corp

Enzo Biochem

Risk-Adjusted Performance

0 of 100

Very Weak

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

Definitive Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Enzo Biochem and Definitive Healthcare

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

The idea behind Enzo Biochem and Definitive Healthcare 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.