Correlation Between Galera Therapeutics and Encision

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

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

Diversification Opportunities for Galera Therapeutics and Encision

-0.35

Correlation Coefficient

Galera Therapeutics  Encision

Very good diversification

The 3 months correlation between Galera and Encision is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Galera Therapeutics and Encision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encision and Galera 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 Galera Therapeutics are associated (or correlated) with Encision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encision has no effect on the direction of Galera Therapeutics i.e., Galera Therapeutics and Encision go up and down completely randomly.

Pair Corralation between Galera Therapeutics and Encision

If you would invest  44.00  in Encision on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Encision or generate 0.0% return on investment over 90 days.

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

Galera Therapeutics  vs.  Encision

Galera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galera Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Galera Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Encision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Encision is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Galera Therapeutics and Encision

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

The idea behind Galera Therapeutics and Encision 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.