Correlation Between Eterna Therapeutics and Galecto

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

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

Diversification Opportunities for Eterna Therapeutics and Galecto

0.43

Correlation Coefficient

Eterna Therapeutics  Galecto

Very weak diversification

The 3 months correlation between Eterna and Galecto is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eterna Therapeutics and Galecto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galecto and Eterna Therapeutics 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 Eterna Therapeutics are associated (or correlated) with Galecto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galecto has no effect on the direction of Eterna Therapeutics i.e., Eterna Therapeutics and Galecto go up and down completely randomly.

Pair Corralation between Eterna Therapeutics and Galecto

Given the investment horizon of 90 days Eterna Therapeutics is expected to under-perform the Galecto. In addition to that, Eterna Therapeutics is 1.23 times more volatile than Galecto. It trades about -0.02 of its total potential returns per unit of risk. Galecto is currently generating about -0.01 per unit of volatility. If you would invest  460.00  in Galecto on December 28, 2024 and sell it today you would lose (118.00) from holding Galecto or give up 25.65% of portfolio value over 90 days.

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

Eterna Therapeutics  vs.  Galecto

Eterna Therapeutics

Risk-Adjusted Performance

Weak

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

Galecto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galecto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Eterna Therapeutics and Galecto

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

The idea behind Eterna Therapeutics and Galecto 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.