Correlation Between Acumen Pharmaceuticals and Lantronix

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

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

Diversification Opportunities for Acumen Pharmaceuticals and Lantronix

0.91

Correlation Coefficient

Acumen Pharmaceuticals  Lantronix

Almost no diversification

The 3 months correlation between Acumen and Lantronix is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and Lantronix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantronix and Acumen Pharmaceuticals 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 Acumen Pharmaceuticals are associated (or correlated) with Lantronix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantronix has no effect on the direction of Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and Lantronix go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and Lantronix

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to generate 0.82 times more return on investment than Lantronix. However, Acumen Pharmaceuticals is 1.22 times less risky than Lantronix. It trades about -0.13 of its potential returns per unit of risk. Lantronix is currently generating about -0.14 per unit of risk. If you would invest  175.00  in Acumen Pharmaceuticals on December 29, 2024 and sell it today you would lose (52.00) from holding Acumen Pharmaceuticals or give up 29.71% of portfolio value over 90 days.

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

Acumen Pharmaceuticals  vs.  Lantronix

Acumen Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acumen Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lantronix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lantronix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Acumen Pharmaceuticals and Lantronix

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

The idea behind Acumen Pharmaceuticals and Lantronix 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.