Correlation Between Lumos Pharma and Lisata Therapeutics

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

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

Diversification Opportunities for Lumos Pharma and Lisata Therapeutics

-0.05

Correlation Coefficient

Lumos Pharma  Lisata Therapeutics

Good diversification

The 3 months correlation between Lumos and Lisata is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lumos Pharma and Lisata Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisata Therapeutics 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 Lisata Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lisata Therapeutics has no effect on the direction of Lumos Pharma i.e., Lumos Pharma and Lisata Therapeutics go up and down completely randomly.

Pair Corralation between Lumos Pharma and Lisata Therapeutics

If you would invest  282.00  in Lisata Therapeutics on October 11, 2024 and sell it today you would earn a total of  98.00  from holding Lisata Therapeutics or generate 34.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	15.0%
Values	Daily Returns

Lumos Pharma  vs.  Lisata Therapeutics

Lumos Pharma

Risk-Adjusted Performance

0 of 100

OK

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 weak primary indicators, Lumos Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Lisata Therapeutics

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Lumos Pharma and Lisata Therapeutics

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

The idea behind Lumos Pharma and Lisata 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.