Correlation Between LMF Acquisition and Edgewise Therapeutics

Can any of the company-specific risk be diversified away by investing in both LMF Acquisition and Edgewise Therapeutics 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 Edgewise Therapeutics 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 Edgewise Therapeutics, you can compare the effects of market volatilities on LMF Acquisition and Edgewise Therapeutics 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 Edgewise Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LMF Acquisition and Edgewise Therapeutics.

Diversification Opportunities for LMF Acquisition and Edgewise Therapeutics

0.18

Correlation Coefficient

LMF Acquisition  Edgewise Therapeutics

Average diversification

The 3 months correlation between LMF and Edgewise is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding LMF Acquisition Opportunities and Edgewise Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewise Therapeutics 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 Edgewise Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewise Therapeutics has no effect on the direction of LMF Acquisition i.e., LMF Acquisition and Edgewise Therapeutics go up and down completely randomly.

Pair Corralation between LMF Acquisition and Edgewise Therapeutics

Considering the 90-day investment horizon LMF Acquisition Opportunities is expected to generate 0.91 times more return on investment than Edgewise Therapeutics. However, LMF Acquisition Opportunities is 1.1 times less risky than Edgewise Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Edgewise Therapeutics is currently generating about -0.06 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 (7.00) from holding LMF Acquisition Opportunities or give up 3.23% of portfolio value over 90 days.

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

LMF Acquisition Opportunities  vs.  Edgewise Therapeutics

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.

Edgewise Therapeutics

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with LMF Acquisition and Edgewise Therapeutics

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

The idea behind LMF Acquisition Opportunities and Edgewise Therapeutics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.