Correlation Between Connect Biopharma and Eledon Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and Eledon 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 Connect Biopharma and Eledon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Connect Biopharma Holdings and Eledon Pharmaceuticals, you can compare the effects of market volatilities on Connect Biopharma and Eledon 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 Connect Biopharma with a short position of Eledon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Eledon Pharmaceuticals.
Diversification Opportunities for Connect Biopharma and Eledon Pharmaceuticals
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Connect and Eledon is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Eledon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eledon Pharmaceuticals and Connect Biopharma 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 Connect Biopharma Holdings are associated (or correlated) with Eledon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eledon Pharmaceuticals has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and Eledon Pharmaceuticals go up and down completely randomly.
Pair Corralation between Connect Biopharma and Eledon Pharmaceuticals
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to under-perform the Eledon Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Connect Biopharma Holdings is 1.03 times less risky than Eledon Pharmaceuticals. The stock trades about -0.02 of its potential returns per unit of risk. The Eledon Pharmaceuticals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 339.00 in Eledon Pharmaceuticals on October 25, 2024 and sell it today you would earn a total of 73.00 from holding Eledon Pharmaceuticals or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Connect Biopharma Holdings vs. Eledon Pharmaceuticals
Performance |
| Timeline |
| Connect Biopharma |
| Eledon Pharmaceuticals |
Connect Biopharma and Eledon Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and Eledon Pharmaceuticals
The main advantage of trading using opposite Connect Biopharma and Eledon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, Eledon 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 Eledon Pharmaceuticals will offset losses from the drop in Eledon Pharmaceuticals' long position.| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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