Correlation Between Bionomics and Lumos Pharma

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

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

Diversification Opportunities for Bionomics and Lumos Pharma

0.0

Correlation Coefficient

Bionomics  Lumos Pharma

Pay attention - limited upside

The 3 months correlation between Bionomics and Lumos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bionomics Ltd ADR and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Bionomics 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 Bionomics Ltd ADR are associated (or correlated) with Lumos Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumos Pharma has no effect on the direction of Bionomics i.e., Bionomics and Lumos Pharma go up and down completely randomly.

Pair Corralation between Bionomics and Lumos Pharma

If you would invest  364.00  in Bionomics Ltd ADR on December 29, 2024 and sell it today you would earn a total of  124.00  from holding Bionomics Ltd ADR or generate 34.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bionomics Ltd ADR  vs.  Lumos Pharma

Bionomics ADR

Risk-Adjusted Performance

Good

Over the last 90 days Bionomics Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Bionomics showed solid returns over the last few months and may actually be approaching a breakup point.

Lumos Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumos Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Lumos Pharma is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bionomics and Lumos Pharma

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

The idea behind Bionomics Ltd ADR and Lumos Pharma 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.