Correlation Between Eliem Therapeutics and Henry Schein

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

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

Diversification Opportunities for Eliem Therapeutics and Henry Schein

-0.71

Correlation Coefficient

Eliem Therapeutics  Henry Schein

Pay attention - limited upside

The 3 months correlation between Eliem and Henry is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eliem Therapeutics and Henry Schein in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henry Schein 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 Henry Schein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henry Schein has no effect on the direction of Eliem Therapeutics i.e., Eliem Therapeutics and Henry Schein go up and down completely randomly.

Pair Corralation between Eliem Therapeutics and Henry Schein

Given the investment horizon of 90 days Eliem Therapeutics is expected to generate 11.87 times more return on investment than Henry Schein. However, Eliem Therapeutics is 11.87 times more volatile than Henry Schein. It trades about 0.37 of its potential returns per unit of risk. Henry Schein is currently generating about -0.07 per unit of risk. If you would invest  269.00  in Eliem Therapeutics on February 9, 2024 and sell it today you would earn a total of  663.00  from holding Eliem Therapeutics or generate 246.47% return on investment over 90 days.

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

Eliem Therapeutics  vs.  Henry Schein

Eliem Therapeutics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eliem Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eliem Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Henry Schein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henry Schein has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Henry Schein is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eliem Therapeutics and Henry Schein

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

The idea behind Eliem Therapeutics and Henry Schein 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.