Correlation Between Gain Therapeutics and Elevation Oncology

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

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

Diversification Opportunities for Gain Therapeutics and Elevation Oncology

-0.44

Correlation Coefficient

Gain Therapeutics  Elevation Oncology

Very good diversification

The 3 months correlation between Gain and Elevation is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gain Therapeutics and Elevation Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevation Oncology and Gain 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 Gain Therapeutics are associated (or correlated) with Elevation Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevation Oncology has no effect on the direction of Gain Therapeutics i.e., Gain Therapeutics and Elevation Oncology go up and down completely randomly.

Pair Corralation between Gain Therapeutics and Elevation Oncology

Given the investment horizon of 90 days Gain Therapeutics is expected to under-perform the Elevation Oncology. In addition to that, Gain Therapeutics is 1.03 times more volatile than Elevation Oncology. It trades about -0.12 of its total potential returns per unit of risk. Elevation Oncology is currently generating about 0.22 per unit of volatility. If you would invest  52.00  in Elevation Oncology on September 3, 2024 and sell it today you would earn a total of  12.00  from holding Elevation Oncology or generate 23.08% return on investment over 90 days.

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

Gain Therapeutics  vs.  Elevation Oncology

Gain Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gain Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Gain Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Elevation Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevation Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Gain Therapeutics and Elevation Oncology

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

The idea behind Gain Therapeutics and Elevation Oncology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.