Correlation Between Institute and Enlivex Therapeutics

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

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

Diversification Opportunities for Institute and Enlivex Therapeutics

-0.37

Correlation Coefficient

Institute  Enlivex Therapeutics

Very good diversification

The 3 months correlation between Institute and Enlivex is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Institute of Biomedical and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Institute 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 Institute of Biomedical 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 Institute i.e., Institute and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Institute and Enlivex Therapeutics

Given the investment horizon of 90 days Institute of Biomedical is expected to generate 3.1 times more return on investment than Enlivex Therapeutics. However, Institute is 3.1 times more volatile than Enlivex Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Enlivex Therapeutics is currently generating about 0.06 per unit of risk. If you would invest  0.86  in Institute of Biomedical on December 2, 2024 and sell it today you would earn a total of  1.04  from holding Institute of Biomedical or generate 120.93% return on investment over 90 days.

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

Institute of Biomedical  vs.  Enlivex Therapeutics

Institute of Biomedical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Institute of Biomedical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Institute unveiled solid returns over the last few months and may actually be approaching a breakup point.

Enlivex Therapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enlivex Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Enlivex Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Institute and Enlivex Therapeutics

The main advantage of trading using opposite Institute and Enlivex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Institute 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 Institute of Biomedical 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.