Correlation Between Larimar Therapeutics and Xencor

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

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

Diversification Opportunities for Larimar Therapeutics and Xencor

-0.21

Correlation Coefficient

Larimar Therapeutics  Xencor

Very good diversification

The 3 months correlation between Larimar and Xencor is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc 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 Xencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xencor Inc has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and Xencor go up and down completely randomly.

Pair Corralation between Larimar Therapeutics and Xencor

Given the investment horizon of 90 days Larimar Therapeutics is expected to under-perform the Xencor. In addition to that, Larimar Therapeutics is 1.35 times more volatile than Xencor Inc. It trades about -0.1 of its total potential returns per unit of risk. Xencor Inc is currently generating about 0.22 per unit of volatility. If you would invest  1,632  in Xencor Inc on September 5, 2024 and sell it today you would earn a total of  1,028  from holding Xencor Inc or generate 62.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Larimar Therapeutics  vs.  Xencor Inc

Larimar Therapeutics

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's primary 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.

Xencor Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xencor Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Xencor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Larimar Therapeutics and Xencor

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

The idea behind Larimar Therapeutics and Xencor Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.