Correlation Between Larimar Therapeutics and CytomX Therapeutics

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

Diversification Opportunities for Larimar Therapeutics and CytomX Therapeutics

0.92

Correlation Coefficient

Larimar Therapeutics  CytomX Therapeutics

Almost no diversification

The 3 months correlation between Larimar and CytomX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and CytomX Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CytomX 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 CytomX Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CytomX Therapeutics has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and CytomX Therapeutics go up and down completely randomly.

Pair Corralation between Larimar Therapeutics and CytomX Therapeutics

Given the investment horizon of 90 days Larimar Therapeutics is expected to generate 1.01 times more return on investment than CytomX Therapeutics. However, Larimar Therapeutics is 1.01 times more volatile than CytomX Therapeutics. It trades about -0.15 of its potential returns per unit of risk. CytomX Therapeutics is currently generating about -0.15 per unit of risk. If you would invest  391.00  in Larimar Therapeutics on December 29, 2024 and sell it today you would lose (151.00) from holding Larimar Therapeutics or give up 38.62% of portfolio value over 90 days.

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

Larimar Therapeutics  vs.  CytomX Therapeutics

Larimar Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Larimar Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CytomX Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days CytomX Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Larimar Therapeutics and CytomX Therapeutics

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

The idea behind Larimar Therapeutics and CytomX 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.