Correlation Between LMF Acquisition and BioLineRx

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

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

Diversification Opportunities for LMF Acquisition and BioLineRx

0.72

Correlation Coefficient

LMF Acquisition  BioLineRx

Poor diversification

The 3 months correlation between LMF and BioLineRx is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding LMF Acquisition Opportunities and BioLineRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLineRx and LMF Acquisition 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 LMF Acquisition Opportunities are associated (or correlated) with BioLineRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLineRx has no effect on the direction of LMF Acquisition i.e., LMF Acquisition and BioLineRx go up and down completely randomly.

Pair Corralation between LMF Acquisition and BioLineRx

Considering the 90-day investment horizon LMF Acquisition Opportunities is expected to generate 0.41 times more return on investment than BioLineRx. However, LMF Acquisition Opportunities is 2.43 times less risky than BioLineRx. It trades about -0.02 of its potential returns per unit of risk. BioLineRx is currently generating about -0.13 per unit of risk. If you would invest  217.00  in LMF Acquisition Opportunities on October 8, 2024 and sell it today you would lose (9.00) from holding LMF Acquisition Opportunities or give up 4.15% of portfolio value over 90 days.

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

LMF Acquisition Opportunities  vs.  BioLineRx

LMF Acquisition Oppo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LMF Acquisition Opportunities 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 fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BioLineRx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioLineRx 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LMF Acquisition and BioLineRx

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

The idea behind LMF Acquisition Opportunities and BioLineRx 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.