Correlation Between Connect Biopharma and Eton Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Connect Biopharma and Eton 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 Eton 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 Eton Pharmaceuticals, you can compare the effects of market volatilities on Connect Biopharma and Eton 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 Eton Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connect Biopharma and Eton Pharmaceuticals.
Diversification Opportunities for Connect Biopharma and Eton Pharmaceuticals
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Connect and Eton is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and Eton Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eton 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 Eton Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eton Pharmaceuticals has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and Eton Pharmaceuticals go up and down completely randomly.
Pair Corralation between Connect Biopharma and Eton Pharmaceuticals
Given the investment horizon of 90 days Connect Biopharma Holdings is expected to under-perform the Eton Pharmaceuticals. In addition to that, Connect Biopharma is 1.04 times more volatile than Eton Pharmaceuticals. It trades about -0.17 of its total potential returns per unit of risk. Eton Pharmaceuticals is currently generating about 0.29 per unit of volatility. If you would invest 813.00 in Eton Pharmaceuticals on August 24, 2024 and sell it today you would earn a total of 262.00 from holding Eton Pharmaceuticals or generate 32.23% 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. Eton Pharmaceuticals
Performance |
| Timeline |
| Connect Biopharma |
| Eton Pharmaceuticals |
Connect Biopharma and Eton Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Connect Biopharma and Eton Pharmaceuticals
The main advantage of trading using opposite Connect Biopharma and Eton Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connect Biopharma position performs unexpectedly, Eton 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 Eton Pharmaceuticals will offset losses from the drop in Eton Pharmaceuticals' long position.| Connect Biopharma vs. Assembly Biosciences | Connect Biopharma vs. Instil Bio | Connect Biopharma vs. CytomX Therapeutics | Connect Biopharma vs. Achilles Therapeutics PLC |
| Eton Pharmaceuticals vs. Connect Biopharma Holdings | Eton Pharmaceuticals vs. Acumen Pharmaceuticals | Eton Pharmaceuticals vs. Nuvation Bio | Eton Pharmaceuticals vs. Eledon Pharmaceuticals |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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