Correlation Between Larimar Therapeutics and AgeX Therapeutics

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

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

Diversification Opportunities for Larimar Therapeutics and AgeX Therapeutics

0.32

Correlation Coefficient

Larimar Therapeutics  AgeX Therapeutics

Weak diversification

The 3 months correlation between Larimar and AgeX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and AgeX Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgeX Therapeutics and Larimar 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 Larimar Therapeutics are associated (or correlated) with AgeX Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgeX Therapeutics has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and AgeX Therapeutics go up and down completely randomly.

Pair Corralation between Larimar Therapeutics and AgeX Therapeutics

Given the investment horizon of 90 days Larimar Therapeutics is expected to generate 2.57 times less return on investment than AgeX Therapeutics. But when comparing it to its historical volatility, Larimar Therapeutics is 1.43 times less risky than AgeX Therapeutics. It trades about 0.06 of its potential returns per unit of risk. AgeX Therapeutics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  63.00  in AgeX Therapeutics on August 31, 2024 and sell it today you would earn a total of  11.00  from holding AgeX Therapeutics or generate 17.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	8.56%
Values	Daily Returns

Larimar Therapeutics  vs.  AgeX Therapeutics

Larimar Therapeutics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Larimar Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Larimar Therapeutics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

AgeX Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AgeX Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AgeX Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Larimar Therapeutics and AgeX Therapeutics

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

The idea behind Larimar Therapeutics and AgeX 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.