Correlation Between Opthea and Enlivex Therapeutics

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

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

Diversification Opportunities for Opthea and Enlivex Therapeutics

-0.57

Correlation Coefficient

Opthea  Enlivex Therapeutics

Excellent diversification

The 3 months correlation between Opthea and Enlivex is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Enlivex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlivex Therapeutics and Opthea 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 Opthea 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 Opthea i.e., Opthea and Enlivex Therapeutics go up and down completely randomly.

Pair Corralation between Opthea and Enlivex Therapeutics

Considering the 90-day investment horizon Opthea is expected to generate 1.47 times more return on investment than Enlivex Therapeutics. However, Opthea is 1.47 times more volatile than Enlivex Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Enlivex Therapeutics is currently generating about -0.03 per unit of risk. If you would invest  387.00  in Opthea on December 28, 2024 and sell it today you would lose (46.00) from holding Opthea or give up 11.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Opthea  vs.  Enlivex Therapeutics

Opthea

Risk-Adjusted Performance

Very Weak

Over the last 90 days Opthea has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Opthea is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 Opthea and Enlivex Therapeutics

The main advantage of trading using opposite Opthea and Enlivex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opthea 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 Opthea 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.