Correlation Between Eyepoint Pharmaceuticals and Salarius Pharmaceuticals

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

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

Diversification Opportunities for Eyepoint Pharmaceuticals and Salarius Pharmaceuticals

0.65

Correlation Coefficient

Eyepoint Pharmaceuticals  Salarius Pharmaceuticals

Poor diversification

The 3 months correlation between Eyepoint and Salarius is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eyepoint Pharmaceuticals and Salarius Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salarius Pharmaceuticals and Eyepoint 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 Eyepoint Pharmaceuticals are associated (or correlated) with Salarius Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salarius Pharmaceuticals has no effect on the direction of Eyepoint Pharmaceuticals i.e., Eyepoint Pharmaceuticals and Salarius Pharmaceuticals go up and down completely randomly.

Pair Corralation between Eyepoint Pharmaceuticals and Salarius Pharmaceuticals

Given the investment horizon of 90 days Eyepoint Pharmaceuticals is expected to under-perform the Salarius Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Eyepoint Pharmaceuticals is 3.8 times less risky than Salarius Pharmaceuticals. The stock trades about -0.04 of its potential returns per unit of risk. The Salarius Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Salarius Pharmaceuticals on December 29, 2024 and sell it today you would lose (66.00) from holding Salarius Pharmaceuticals or give up 43.42% of portfolio value over 90 days.

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

Eyepoint Pharmaceuticals  vs.  Salarius Pharmaceuticals

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eyepoint Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Salarius Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salarius Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Salarius Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eyepoint Pharmaceuticals and Salarius Pharmaceuticals

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

The idea behind Eyepoint Pharmaceuticals and Salarius Pharmaceuticals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.