Correlation Between Protara Therapeutics and Enliven Therapeutics

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

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

Diversification Opportunities for Protara Therapeutics and Enliven Therapeutics

0.79

Correlation Coefficient

Protara Therapeutics  Enliven Therapeutics

Poor diversification

The 3 months correlation between Protara and Enliven is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Protara Therapeutics and Enliven Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enliven Therapeutics and Protara Therapeutics 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 Protara Therapeutics are associated (or correlated) with Enliven Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enliven Therapeutics has no effect on the direction of Protara Therapeutics i.e., Protara Therapeutics and Enliven Therapeutics go up and down completely randomly.

Pair Corralation between Protara Therapeutics and Enliven Therapeutics

Given the investment horizon of 90 days Protara Therapeutics is expected to under-perform the Enliven Therapeutics. In addition to that, Protara Therapeutics is 1.37 times more volatile than Enliven Therapeutics. It trades about -0.03 of its total potential returns per unit of risk. Enliven Therapeutics is currently generating about -0.01 per unit of volatility. If you would invest  2,239  in Enliven Therapeutics on December 29, 2024 and sell it today you would lose (132.00) from holding Enliven Therapeutics or give up 5.9% of portfolio value over 90 days.

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

Protara Therapeutics  vs.  Enliven Therapeutics

Protara Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Protara Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Enliven Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enliven Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Enliven Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Protara Therapeutics and Enliven Therapeutics

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

The idea behind Protara Therapeutics and Enliven 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.