Correlation Between Lyra Therapeutics and GlycoMimetics

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

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

Diversification Opportunities for Lyra Therapeutics and GlycoMimetics

0.47

Correlation Coefficient

Lyra Therapeutics  GlycoMimetics

Very weak diversification

The 3 months correlation between Lyra and GlycoMimetics is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lyra Therapeutics and GlycoMimetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlycoMimetics and Lyra 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 Lyra Therapeutics are associated (or correlated) with GlycoMimetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlycoMimetics has no effect on the direction of Lyra Therapeutics i.e., Lyra Therapeutics and GlycoMimetics go up and down completely randomly.

Pair Corralation between Lyra Therapeutics and GlycoMimetics

Given the investment horizon of 90 days Lyra Therapeutics is expected to under-perform the GlycoMimetics. But the stock apears to be less risky and, when comparing its historical volatility, Lyra Therapeutics is 1.44 times less risky than GlycoMimetics. The stock trades about -0.16 of its potential returns per unit of risk. The GlycoMimetics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  25.00  in GlycoMimetics on December 30, 2024 and sell it today you would lose (3.00) from holding GlycoMimetics or give up 12.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Lyra Therapeutics  vs.  GlycoMimetics

Lyra Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyra Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

GlycoMimetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days GlycoMimetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, GlycoMimetics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lyra Therapeutics and GlycoMimetics

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

The idea behind Lyra Therapeutics and GlycoMimetics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.