Correlation Between Cell Source and Entera Bio

Can any of the company-specific risk be diversified away by investing in both Cell Source and Entera 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 Cell Source and Entera Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cell Source and Entera Bio, you can compare the effects of market volatilities on Cell Source and Entera 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 Cell Source with a short position of Entera Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cell Source and Entera Bio.

Diversification Opportunities for Cell Source and Entera Bio

-0.06

Correlation Coefficient

Cell Source  Entera Bio

Good diversification

The 3 months correlation between Cell and Entera is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cell Source and Entera Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entera Bio and Cell Source 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 Cell Source are associated (or correlated) with Entera Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entera Bio has no effect on the direction of Cell Source i.e., Cell Source and Entera Bio go up and down completely randomly.

Pair Corralation between Cell Source and Entera Bio

Given the investment horizon of 90 days Cell Source is expected to generate 2.66 times more return on investment than Entera Bio. However, Cell Source is 2.66 times more volatile than Entera Bio. It trades about 0.09 of its potential returns per unit of risk. Entera Bio is currently generating about -0.01 per unit of risk. If you would invest  26.00  in Cell Source on May 15, 2025 and sell it today you would earn a total of  9.00  from holding Cell Source or generate 34.62% return on investment over 90 days.

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

Cell Source  vs.  Entera Bio

Cell Source

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Cell Source are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Cell Source unveiled solid returns over the last few months and may actually be approaching a breakup point.

Entera Bio

Risk-Adjusted Performance

Weakest

Over the last 90 days Entera Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Entera Bio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cell Source and Entera Bio

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

The idea behind Cell Source and Entera Bio 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.