Correlation Between Ignyte Acquisition and Eliem Therapeutics

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

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

Diversification Opportunities for Ignyte Acquisition and Eliem Therapeutics

-0.64

Correlation Coefficient

Ignyte Acquisition  Eliem Therapeutics

Excellent diversification

The 3 months correlation between Ignyte and Eliem is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ignyte Acquisition Corp and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics and Ignyte Acquisition 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 Ignyte Acquisition Corp are associated (or correlated) with Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Ignyte Acquisition i.e., Ignyte Acquisition and Eliem Therapeutics go up and down completely randomly.

Pair Corralation between Ignyte Acquisition and Eliem Therapeutics

If you would invest  301.00  in Eliem Therapeutics on September 16, 2024 and sell it today you would earn a total of  8.00  from holding Eliem Therapeutics or generate 2.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	7.14%
Values	Daily Returns

Ignyte Acquisition Corp  vs.  Eliem Therapeutics

Ignyte Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ignyte Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ignyte Acquisition is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Eliem Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eliem Therapeutics 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ignyte Acquisition and Eliem Therapeutics

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

The idea behind Ignyte Acquisition Corp and Eliem 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.