Correlation Between Boston Beer and Elicio Therapeutics

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

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

Diversification Opportunities for Boston Beer and Elicio Therapeutics

0.55

Correlation Coefficient

Boston Beer  Elicio Therapeutics

Very weak diversification

The 3 months correlation between Boston and Elicio is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Elicio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elicio Therapeutics and Boston Beer 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 Boston Beer are associated (or correlated) with Elicio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elicio Therapeutics has no effect on the direction of Boston Beer i.e., Boston Beer and Elicio Therapeutics go up and down completely randomly.

Pair Corralation between Boston Beer and Elicio Therapeutics

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Elicio Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 3.8 times less risky than Elicio Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Elicio Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  501.00  in Elicio Therapeutics on September 13, 2024 and sell it today you would earn a total of  31.00  from holding Elicio Therapeutics or generate 6.19% return on investment over 90 days.

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

Boston Beer  vs.  Elicio Therapeutics

Boston Beer

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

Elicio Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elicio Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Elicio Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Beer and Elicio Therapeutics

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

The idea behind Boston Beer and Elicio 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 Global Correlations module to find global opportunities by holding instruments from different markets.