Correlation Between Eliem Therapeutics and Passage Bio
Can any of the company-specific risk be diversified away by investing in both Eliem Therapeutics and Passage Bio 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 Eliem Therapeutics and Passage Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eliem Therapeutics and Passage Bio, you can compare the effects of market volatilities on Eliem Therapeutics and Passage Bio 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 Eliem Therapeutics with a short position of Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eliem Therapeutics and Passage Bio.
Diversification Opportunities for Eliem Therapeutics and Passage Bio
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eliem and Passage is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eliem Therapeutics and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio and Eliem 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 Eliem Therapeutics are associated (or correlated) with Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Eliem Therapeutics i.e., Eliem Therapeutics and Passage Bio go up and down completely randomly.
Pair Corralation between Eliem Therapeutics and Passage Bio
Given the investment horizon of 90 days Eliem Therapeutics is expected to under-perform the Passage Bio. But the stock apears to be less risky and, when comparing its historical volatility, Eliem Therapeutics is 1.17 times less risky than Passage Bio. The stock trades about -0.12 of its potential returns per unit of risk. The Passage Bio is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 124.00 in Passage Bio on August 30, 2024 and sell it today you would lose (49.00) from holding Passage Bio or give up 39.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Eliem Therapeutics vs. Passage Bio
Performance |
| Timeline |
| Eliem Therapeutics |
| Passage Bio |
Eliem Therapeutics and Passage Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eliem Therapeutics and Passage Bio
The main advantage of trading using opposite Eliem Therapeutics and Passage Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eliem Therapeutics position performs unexpectedly, Passage Bio 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 Passage Bio will offset losses from the drop in Passage Bio's long position.| Eliem Therapeutics vs. Pmv Pharmaceuticals | Eliem Therapeutics vs. MediciNova | Eliem Therapeutics vs. Pharvaris BV | Eliem Therapeutics vs. PepGen |
| Passage Bio vs. Ikena Oncology | Passage Bio vs. Eliem Therapeutics | Passage Bio vs. HCW Biologics | Passage Bio vs. Tempest Therapeutics |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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