Correlation Between Lixte Biotechnology and Reviva Pharmaceuticals

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

By analyzing existing cross correlation between Lixte Biotechnology Holdings and Reviva Pharmaceuticals Holdings, you can compare the effects of market volatilities on Lixte Biotechnology and Reviva Pharmaceuticals 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 Lixte Biotechnology with a short position of Reviva Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixte Biotechnology and Reviva Pharmaceuticals.

Diversification Opportunities for Lixte Biotechnology and Reviva Pharmaceuticals

-0.42

Correlation Coefficient

Lixte Biotechnology  Reviva Pharmaceuticals

Very good diversification

The 3 months correlation between Lixte and Reviva is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lixte Biotechnology Holdings and Reviva Pharmaceuticals Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reviva Pharmaceuticals and Lixte Biotechnology 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 Lixte Biotechnology Holdings are associated (or correlated) with Reviva Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reviva Pharmaceuticals has no effect on the direction of Lixte Biotechnology i.e., Lixte Biotechnology and Reviva Pharmaceuticals go up and down completely randomly.

Pair Corralation between Lixte Biotechnology and Reviva Pharmaceuticals

Assuming the 90 days horizon Lixte Biotechnology Holdings is expected to generate 1.95 times more return on investment than Reviva Pharmaceuticals. However, Lixte Biotechnology is 1.95 times more volatile than Reviva Pharmaceuticals Holdings. It trades about 0.14 of its potential returns per unit of risk. Reviva Pharmaceuticals Holdings is currently generating about 0.06 per unit of risk. If you would invest  2.80  in Lixte Biotechnology Holdings on November 29, 2024 and sell it today you would earn a total of  2.17  from holding Lixte Biotechnology Holdings or generate 77.5% return on investment over 90 days.

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

Lixte Biotechnology Holdings  vs.  Reviva Pharmaceuticals Holding

Lixte Biotechnology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lixte Biotechnology Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lixte Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Reviva Pharmaceuticals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reviva Pharmaceuticals Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Reviva Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lixte Biotechnology and Reviva Pharmaceuticals

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

The idea behind Lixte Biotechnology Holdings and Reviva Pharmaceuticals Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.