Correlation Between Eyenovia and Equillium

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

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

Diversification Opportunities for Eyenovia and Equillium

-0.33

Correlation Coefficient

Eyenovia  Equillium

Very good diversification

The 3 months correlation between Eyenovia and Equillium is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eyenovia and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Eyenovia 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 Eyenovia are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Eyenovia i.e., Eyenovia and Equillium go up and down completely randomly.

Pair Corralation between Eyenovia and Equillium

Given the investment horizon of 90 days Eyenovia is expected to under-perform the Equillium. In addition to that, Eyenovia is 1.32 times more volatile than Equillium. It trades about -0.28 of its total potential returns per unit of risk. Equillium is currently generating about -0.05 per unit of volatility. If you would invest  74.00  in Equillium on December 29, 2024 and sell it today you would lose (25.00) from holding Equillium or give up 33.78% of portfolio value over 90 days.

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

Eyenovia  vs.  Equillium

Eyenovia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eyenovia 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Equillium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Eyenovia and Equillium

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

The idea behind Eyenovia and Equillium 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.