Correlation Between EnGene Holdings and Enliven Therapeutics

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

By analyzing existing cross correlation between enGene Holdings Common and Enliven Therapeutics, you can compare the effects of market volatilities on EnGene Holdings and Enliven Therapeutics 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 EnGene Holdings with a short position of Enliven Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnGene Holdings and Enliven Therapeutics.

Diversification Opportunities for EnGene Holdings and Enliven Therapeutics

0.67

Correlation Coefficient

EnGene Holdings  Enliven Therapeutics

Poor diversification

The 3 months correlation between EnGene and Enliven is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding enGene Holdings Common and Enliven Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enliven Therapeutics and EnGene Holdings 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 enGene Holdings Common are associated (or correlated) with Enliven Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enliven Therapeutics has no effect on the direction of EnGene Holdings i.e., EnGene Holdings and Enliven Therapeutics go up and down completely randomly.

Pair Corralation between EnGene Holdings and Enliven Therapeutics

Given the investment horizon of 90 days enGene Holdings Common is expected to generate 2.82 times more return on investment than Enliven Therapeutics. However, EnGene Holdings is 2.82 times more volatile than Enliven Therapeutics. It trades about 0.31 of its potential returns per unit of risk. Enliven Therapeutics is currently generating about 0.02 per unit of risk. If you would invest  663.00  in enGene Holdings Common on August 5, 2024 and sell it today you would earn a total of  226.00  from holding enGene Holdings Common or generate 34.09% return on investment over 90 days.

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

enGene Holdings Common  vs.  Enliven Therapeutics

enGene Holdings Common

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in enGene Holdings Common are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, EnGene Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Enliven Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enliven Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Enliven Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnGene Holdings and Enliven Therapeutics

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

The idea behind enGene Holdings Common and Enliven Therapeutics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.