Correlation Between Lumos Pharma and Biocardia

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

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

Diversification Opportunities for Lumos Pharma and Biocardia

0.0

Correlation Coefficient

Lumos Pharma  Biocardia

Pay attention - limited upside

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

Pair Corralation between Lumos Pharma and Biocardia

If you would invest  215.00  in Biocardia on December 29, 2024 and sell it today you would earn a total of  65.00  from holding Biocardia or generate 30.23% return on investment over 90 days.

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

Lumos Pharma  vs.  Biocardia

Lumos Pharma

Risk-Adjusted Performance

Very Weak

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

Biocardia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biocardia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Biocardia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumos Pharma and Biocardia

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

The idea behind Lumos Pharma and Biocardia 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.