Correlation Between Sellas Life and Eyepoint Pharmaceuticals

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

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

Diversification Opportunities for Sellas Life and Eyepoint Pharmaceuticals

-0.23

Correlation Coefficient

Sellas Life  Eyepoint Pharmaceuticals

Very good diversification

The 3 months correlation between Sellas and Eyepoint is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sellas Life Sciences and Eyepoint Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyepoint Pharmaceuticals and Sellas Life 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 Sellas Life Sciences are associated (or correlated) with Eyepoint Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyepoint Pharmaceuticals has no effect on the direction of Sellas Life i.e., Sellas Life and Eyepoint Pharmaceuticals go up and down completely randomly.

Pair Corralation between Sellas Life and Eyepoint Pharmaceuticals

Considering the 90-day investment horizon Sellas Life Sciences is expected to under-perform the Eyepoint Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Sellas Life Sciences is 1.33 times less risky than Eyepoint Pharmaceuticals. The stock trades about -0.32 of its potential returns per unit of risk. The Eyepoint Pharmaceuticals is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  717.00  in Eyepoint Pharmaceuticals on December 3, 2024 and sell it today you would lose (145.00) from holding Eyepoint Pharmaceuticals or give up 20.22% of portfolio value over 90 days.

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

Sellas Life Sciences  vs.  Eyepoint Pharmaceuticals

Sellas Life Sciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sellas Life Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Sellas Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eyepoint Pharmaceuticals 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sellas Life and Eyepoint Pharmaceuticals

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

The idea behind Sellas Life Sciences and Eyepoint 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.