Correlation Between Equillium and Inhibikase Therapeutics

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

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

Diversification Opportunities for Equillium and Inhibikase Therapeutics

-0.08

Correlation Coefficient

Equillium  Inhibikase Therapeutics

Good diversification

The 3 months correlation between Equillium and Inhibikase is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Inhibikase Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibikase 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 Inhibikase Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibikase Therapeutics has no effect on the direction of Equillium i.e., Equillium and Inhibikase Therapeutics go up and down completely randomly.

Pair Corralation between Equillium and Inhibikase Therapeutics

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Inhibikase Therapeutics. In addition to that, Equillium is 1.08 times more volatile than Inhibikase Therapeutics. It trades about 0.0 of its total potential returns per unit of risk. Inhibikase Therapeutics is currently generating about 0.26 per unit of volatility. If you would invest  118.00  in Inhibikase Therapeutics on September 13, 2024 and sell it today you would earn a total of  202.00  from holding Inhibikase Therapeutics or generate 171.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Equillium  vs.  Inhibikase 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 current stock price agitation, may contribute to short-term losses for the retail investors.

Inhibikase Therapeutics

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Inhibikase Therapeutics are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Inhibikase Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and Inhibikase Therapeutics

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

The idea behind Equillium and Inhibikase 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.