Correlation Between Champions Oncology and Eliem Therapeutics

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

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

Diversification Opportunities for Champions Oncology and Eliem Therapeutics

0.25

Correlation Coefficient

Champions Oncology  Eliem Therapeutics

Modest diversification

The 3 months correlation between Champions and Eliem is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Champions Oncology and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics and Champions Oncology 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 Champions Oncology are associated (or correlated) with Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Champions Oncology i.e., Champions Oncology and Eliem Therapeutics go up and down completely randomly.

Pair Corralation between Champions Oncology and Eliem Therapeutics

Given the investment horizon of 90 days Champions Oncology is expected to generate 0.68 times more return on investment than Eliem Therapeutics. However, Champions Oncology is 1.48 times less risky than Eliem Therapeutics. It trades about -0.02 of its potential returns per unit of risk. Eliem Therapeutics is currently generating about -0.07 per unit of risk. If you would invest  505.00  in Champions Oncology on July 19, 2024 and sell it today you would lose (49.00) from holding Champions Oncology or give up 9.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.5%
Values	Daily Returns

Champions Oncology  vs.  Eliem Therapeutics

Champions Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champions Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Champions Oncology is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Eliem Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eliem Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Champions Oncology and Eliem Therapeutics

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

The idea behind Champions Oncology and Eliem 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.