Correlation Between Precigen and Eton Pharmaceuticals

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

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

Diversification Opportunities for Precigen and Eton Pharmaceuticals

-0.05

Correlation Coefficient

Precigen  Eton Pharmaceuticals

Good diversification

The 3 months correlation between Precigen and Eton is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Precigen and Eton Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eton Pharmaceuticals and Precigen 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 Precigen are associated (or correlated) with Eton Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eton Pharmaceuticals has no effect on the direction of Precigen i.e., Precigen and Eton Pharmaceuticals go up and down completely randomly.

Pair Corralation between Precigen and Eton Pharmaceuticals

Given the investment horizon of 90 days Precigen is expected to generate 2.07 times more return on investment than Eton Pharmaceuticals. However, Precigen is 2.07 times more volatile than Eton Pharmaceuticals. It trades about 0.33 of its potential returns per unit of risk. Eton Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  80.00  in Precigen on October 10, 2024 and sell it today you would earn a total of  52.00  from holding Precigen or generate 65.0% return on investment over 90 days.

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

Precigen  vs.  Eton Pharmaceuticals

Precigen

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precigen are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Precigen displayed solid returns over the last few months and may actually be approaching a breakup point.

Eton Pharmaceuticals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eton Pharmaceuticals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eton Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Precigen and Eton Pharmaceuticals

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

The idea behind Precigen and Eton 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.