Correlation Between Gain Therapeutics and Lantern Pharma

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

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

Diversification Opportunities for Gain Therapeutics and Lantern Pharma

0.6

Correlation Coefficient

Gain Therapeutics  Lantern Pharma

Poor diversification

The 3 months correlation between Gain and Lantern is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Gain Therapeutics and Lantern Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantern Pharma and Gain Therapeutics 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 Gain Therapeutics 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 Gain Therapeutics i.e., Gain Therapeutics and Lantern Pharma go up and down completely randomly.

Pair Corralation between Gain Therapeutics and Lantern Pharma

Given the investment horizon of 90 days Gain Therapeutics is expected to under-perform the Lantern Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Gain Therapeutics is 1.16 times less risky than Lantern Pharma. The stock trades about 0.0 of its potential returns per unit of risk. The Lantern Pharma is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  327.00  in Lantern Pharma on December 28, 2024 and sell it today you would earn a total of  41.50  from holding Lantern Pharma or generate 12.69% return on investment over 90 days.

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

Gain Therapeutics  vs.  Lantern Pharma

Gain Therapeutics

Risk-Adjusted Performance

Very Weak

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

Lantern Pharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lantern Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lantern Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gain Therapeutics and Lantern Pharma

The main advantage of trading using opposite Gain Therapeutics and Lantern Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gain Therapeutics 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 Gain Therapeutics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.