Correlation Between Living Cell and Enlivex Therapeutics

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

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

Diversification Opportunities for Living Cell and Enlivex Therapeutics

-0.38

Correlation Coefficient

Living Cell  Enlivex Therapeutics

Very good diversification

The 3 months correlation between Living and Enlivex is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Living Cell Technologies and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Living Cell 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 Living Cell Technologies are associated (or correlated) with Enlivex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlivex Therapeutics has no effect on the direction of Living Cell i.e., Living Cell and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Living Cell and Enlivex Therapeutics

Assuming the 90 days horizon Living Cell Technologies is expected to generate 10.7 times more return on investment than Enlivex Therapeutics. However, Living Cell is 10.7 times more volatile than Enlivex Therapeutics. It trades about 0.13 of its potential returns per unit of risk. Enlivex Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  0.51  in Living Cell Technologies on December 23, 2024 and sell it today you would lose (0.11) from holding Living Cell Technologies or give up 21.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Living Cell Technologies  vs.  Enlivex Therapeutics

Living Cell Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Living Cell Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Living Cell reported solid returns over the last few months and may actually be approaching a breakup point.

Enlivex Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enlivex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential 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 Living Cell and Enlivex Therapeutics

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

The idea behind Living Cell Technologies and Enlivex 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.