Correlation Between Ocugen and Larimar Therapeutics

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

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

Diversification Opportunities for Ocugen and Larimar Therapeutics

0.84

Correlation Coefficient

Ocugen  Larimar Therapeutics

Very poor diversification

The 3 months correlation between Ocugen and Larimar is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ocugen Inc and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics and Ocugen 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 Ocugen Inc are associated (or correlated) with Larimar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Larimar Therapeutics has no effect on the direction of Ocugen i.e., Ocugen and Larimar Therapeutics go up and down completely randomly.

Pair Corralation between Ocugen and Larimar Therapeutics

Given the investment horizon of 90 days Ocugen Inc is expected to generate 1.01 times more return on investment than Larimar Therapeutics. However, Ocugen is 1.01 times more volatile than Larimar Therapeutics. It trades about -0.02 of its potential returns per unit of risk. Larimar Therapeutics is currently generating about -0.18 per unit of risk. If you would invest  81.00  in Ocugen Inc on December 26, 2024 and sell it today you would lose (8.49) from holding Ocugen Inc or give up 10.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Ocugen Inc  vs.  Larimar Therapeutics

Ocugen Inc

Risk-Adjusted Performance

Very Weak

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

Larimar Therapeutics

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ocugen and Larimar Therapeutics

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

The idea behind Ocugen Inc and Larimar 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.