Correlation Between Protara Therapeutics and ELYM Old

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

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

Diversification Opportunities for Protara Therapeutics and ELYM Old

-0.78

Correlation Coefficient

Protara Therapeutics  ELYM Old

Pay attention - limited upside

The 3 months correlation between Protara and ELYM is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Protara Therapeutics and ELYM Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELYM Old 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 ELYM Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELYM Old has no effect on the direction of Protara Therapeutics i.e., Protara Therapeutics and ELYM Old go up and down completely randomly.

Pair Corralation between Protara Therapeutics and ELYM Old

Given the investment horizon of 90 days Protara Therapeutics is expected to generate 2.51 times more return on investment than ELYM Old. However, Protara Therapeutics is 2.51 times more volatile than ELYM Old. It trades about 0.16 of its potential returns per unit of risk. ELYM Old is currently generating about -0.23 per unit of risk. If you would invest  226.00  in Protara Therapeutics on October 25, 2024 and sell it today you would earn a total of  243.00  from holding Protara Therapeutics or generate 107.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	49.15%
Values	Daily Returns

Protara Therapeutics  vs.  ELYM Old

Protara Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Protara Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Protara Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

ELYM Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ELYM Old 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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Protara Therapeutics and ELYM Old

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

The idea behind Protara Therapeutics and ELYM Old 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.