Correlation Between IO Biotech and Enzon Pharmaceuticals

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

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

Diversification Opportunities for IO Biotech and Enzon Pharmaceuticals

0.53

Correlation Coefficient

IO Biotech  Enzon Pharmaceuticals

Very weak diversification

The 3 months correlation between IOBT and Enzon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding IO Biotech and Enzon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enzon Pharmaceuticals and IO Biotech 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 IO Biotech are associated (or correlated) with Enzon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enzon Pharmaceuticals has no effect on the direction of IO Biotech i.e., IO Biotech and Enzon Pharmaceuticals go up and down completely randomly.

Pair Corralation between IO Biotech and Enzon Pharmaceuticals

Given the investment horizon of 90 days IO Biotech is expected to under-perform the Enzon Pharmaceuticals. In addition to that, IO Biotech is 1.25 times more volatile than Enzon Pharmaceuticals. It trades about -0.01 of its total potential returns per unit of risk. Enzon Pharmaceuticals is currently generating about 0.02 per unit of volatility. If you would invest  20.00  in Enzon Pharmaceuticals on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Enzon Pharmaceuticals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.35%
Values	Daily Returns

IO Biotech  vs.  Enzon Pharmaceuticals

IO Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IO Biotech 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 fundamental drivers remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Enzon Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enzon Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enzon Pharmaceuticals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IO Biotech and Enzon Pharmaceuticals

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

The idea behind IO Biotech and Enzon 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.