Correlation Between Enzon Pharmaceuticals and CHIR

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

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

Diversification Opportunities for Enzon Pharmaceuticals and CHIR

0.36

Correlation Coefficient

Enzon Pharmaceuticals  CHIR

Weak diversification

The 3 months correlation between Enzon and CHIR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Enzon Pharmaceuticals and CHIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIR and Enzon Pharmaceuticals 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 Enzon Pharmaceuticals are associated (or correlated) with CHIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIR has no effect on the direction of Enzon Pharmaceuticals i.e., Enzon Pharmaceuticals and CHIR go up and down completely randomly.

Pair Corralation between Enzon Pharmaceuticals and CHIR

Given the investment horizon of 90 days Enzon Pharmaceuticals is expected to generate 2.85 times more return on investment than CHIR. However, Enzon Pharmaceuticals is 2.85 times more volatile than CHIR. It trades about 0.0 of its potential returns per unit of risk. CHIR is currently generating about -0.1 per unit of risk. If you would invest  26.00  in Enzon Pharmaceuticals on October 11, 2024 and sell it today you would lose (6.00) from holding Enzon Pharmaceuticals or give up 23.08% of portfolio value over 90 days.

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

Enzon Pharmaceuticals  vs.  CHIR

Enzon Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enzon Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enzon Pharmaceuticals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

CHIR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, CHIR is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Enzon Pharmaceuticals and CHIR

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

The idea behind Enzon Pharmaceuticals and CHIR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.