Correlation Between GH Research and Eliem Therapeutics

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

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

Diversification Opportunities for GH Research and Eliem Therapeutics

-0.51

Correlation Coefficient

GH Research  Eliem Therapeutics

Excellent diversification

The 3 months correlation between GHRS and Eliem is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GH Research PLC and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics and GH Research 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 GH Research PLC are associated (or correlated) with Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of GH Research i.e., GH Research and Eliem Therapeutics go up and down completely randomly.

Pair Corralation between GH Research and Eliem Therapeutics

Given the investment horizon of 90 days GH Research is expected to generate 1.02 times less return on investment than Eliem Therapeutics. But when comparing it to its historical volatility, GH Research PLC is 1.77 times less risky than Eliem Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Eliem Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  274.00  in Eliem Therapeutics on September 12, 2024 and sell it today you would earn a total of  35.00  from holding Eliem Therapeutics or generate 12.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

GH Research PLC  vs.  Eliem Therapeutics

GH Research PLC

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GH Research PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, GH Research may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eliem Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eliem Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GH Research and Eliem Therapeutics

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

The idea behind GH Research PLC and Eliem 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.