Correlation Between Larimar Therapeutics and Cyclacel Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Larimar Therapeutics and Cyclacel 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 Larimar Therapeutics and Cyclacel Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Larimar Therapeutics and Cyclacel Pharmaceuticals, you can compare the effects of market volatilities on Larimar Therapeutics and Cyclacel 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 Larimar Therapeutics with a short position of Cyclacel Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Larimar Therapeutics and Cyclacel Pharmaceuticals.

Diversification Opportunities for Larimar Therapeutics and Cyclacel Pharmaceuticals

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Larimar and Cyclacel is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and Cyclacel Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclacel Pharmaceuticals 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 Cyclacel Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclacel Pharmaceuticals has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and Cyclacel Pharmaceuticals go up and down completely randomly.

Pair Corralation between Larimar Therapeutics and Cyclacel Pharmaceuticals

Given the investment horizon of 90 days Larimar Therapeutics is expected to generate 1.15 times more return on investment than Cyclacel Pharmaceuticals. However, Larimar Therapeutics is 1.15 times more volatile than Cyclacel Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Cyclacel Pharmaceuticals is currently generating about -0.09 per unit of risk. If you would invest  669.00  in Larimar Therapeutics on September 16, 2024 and sell it today you would lose (52.00) from holding Larimar Therapeutics or give up 7.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Larimar Therapeutics  vs.  Cyclacel Pharmaceuticals

 Performance 
       Timeline  
Larimar Therapeutics 

Risk-Adjusted Performance

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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 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.
Cyclacel Pharmaceuticals 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Cyclacel Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Larimar Therapeutics and Cyclacel Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Larimar Therapeutics and Cyclacel Pharmaceuticals

The main advantage of trading using opposite Larimar Therapeutics and Cyclacel Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Larimar Therapeutics position performs unexpectedly, Cyclacel 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 Cyclacel Pharmaceuticals will offset losses from the drop in Cyclacel Pharmaceuticals' long position.
The idea behind Larimar Therapeutics and Cyclacel Pharmaceuticals 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.
Check out your portfolio center.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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