Correlation Between Equillium and Elicio Therapeutics

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

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

Diversification Opportunities for Equillium and Elicio Therapeutics

-0.62

Correlation Coefficient

Equillium  Elicio Therapeutics

Excellent diversification

The 3 months correlation between Equillium and Elicio is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Elicio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elicio Therapeutics and Equillium 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 Equillium are associated (or correlated) with Elicio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elicio Therapeutics has no effect on the direction of Equillium i.e., Equillium and Elicio Therapeutics go up and down completely randomly.

Pair Corralation between Equillium and Elicio Therapeutics

Allowing for the 90-day total investment horizon Equillium is expected to generate 1.13 times less return on investment than Elicio Therapeutics. But when comparing it to its historical volatility, Equillium is 1.07 times less risky than Elicio Therapeutics. It trades about 0.17 of its potential returns per unit of risk. Elicio Therapeutics is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  481.00  in Elicio Therapeutics on October 6, 2024 and sell it today you would earn a total of  81.00  from holding Elicio Therapeutics or generate 16.84% return on investment over 90 days.

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

Equillium  vs.  Elicio Therapeutics

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

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

Elicio Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elicio Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Elicio Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and Elicio Therapeutics

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

The idea behind Equillium and Elicio 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..