Correlation Between Lantern Pharma and Abcam PLC

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

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

Diversification Opportunities for Lantern Pharma and Abcam PLC

0.0

Correlation Coefficient

Lantern Pharma  Abcam PLC

Pay attention - limited upside

The 3 months correlation between Lantern and Abcam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lantern Pharma and Abcam PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcam PLC and Lantern Pharma 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 Lantern Pharma are associated (or correlated) with Abcam PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcam PLC has no effect on the direction of Lantern Pharma i.e., Lantern Pharma and Abcam PLC go up and down completely randomly.

Pair Corralation between Lantern Pharma and Abcam PLC

If you would invest  327.00  in Lantern Pharma on December 28, 2024 and sell it today you would earn a total of  28.00  from holding Lantern Pharma or generate 8.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lantern Pharma  vs.  Abcam PLC

Lantern Pharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lantern Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lantern Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Abcam PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abcam PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Abcam PLC is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lantern Pharma and Abcam PLC

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

The idea behind Lantern Pharma and Abcam PLC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.