Correlation Between Rain Enhancement and Larimar Therapeutics

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

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

Diversification Opportunities for Rain Enhancement and Larimar Therapeutics

0.4

Correlation Coefficient

Rain Enhancement  Larimar Therapeutics

Very weak diversification

The 3 months correlation between Rain and Larimar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Rain Enhancement Technologies and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics and Rain Enhancement 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 Rain Enhancement Technologies 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 Rain Enhancement i.e., Rain Enhancement and Larimar Therapeutics go up and down completely randomly.

Pair Corralation between Rain Enhancement and Larimar Therapeutics

Given the investment horizon of 90 days Rain Enhancement Technologies is expected to under-perform the Larimar Therapeutics. In addition to that, Rain Enhancement is 2.45 times more volatile than Larimar Therapeutics. It trades about -0.15 of its total potential returns per unit of risk. Larimar Therapeutics is currently generating about -0.18 per unit of volatility. If you would invest  396.00  in Larimar Therapeutics on December 27, 2024 and sell it today you would lose (171.00) from holding Larimar Therapeutics or give up 43.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Rain Enhancement Technologies  vs.  Larimar Therapeutics

Rain Enhancement Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rain Enhancement Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 Rain Enhancement and Larimar Therapeutics

The main advantage of trading using opposite Rain Enhancement and Larimar Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rain Enhancement 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 Rain Enhancement Technologies 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.