Correlation Between Bright Minds and Lantern Pharma

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

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

Diversification Opportunities for Bright Minds and Lantern Pharma

-0.65

Correlation Coefficient

Bright Minds  Lantern Pharma

Excellent diversification

The 3 months correlation between Bright and Lantern is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bright Minds Biosciences and Lantern Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantern Pharma and Bright Minds 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 Bright Minds Biosciences are associated (or correlated) with Lantern Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantern Pharma has no effect on the direction of Bright Minds i.e., Bright Minds and Lantern Pharma go up and down completely randomly.

Pair Corralation between Bright Minds and Lantern Pharma

Given the investment horizon of 90 days Bright Minds Biosciences is expected to generate 10.28 times more return on investment than Lantern Pharma. However, Bright Minds is 10.28 times more volatile than Lantern Pharma. It trades about 0.08 of its potential returns per unit of risk. Lantern Pharma is currently generating about 0.02 per unit of risk. If you would invest  146.00  in Bright Minds Biosciences on September 4, 2024 and sell it today you would earn a total of  4,454  from holding Bright Minds Biosciences or generate 3050.68% return on investment over 90 days.

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

Bright Minds Biosciences  vs.  Lantern Pharma

Bright Minds Biosciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Minds Biosciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bright Minds reported solid returns over the last few months and may actually be approaching a breakup point.

Lantern Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantern Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bright Minds and Lantern Pharma

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

The idea behind Bright Minds Biosciences and Lantern 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.