Correlation Between Replimune and Larimar Therapeutics

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

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

Diversification Opportunities for Replimune and Larimar Therapeutics

0.43

Correlation Coefficient

Replimune  Larimar Therapeutics

Very weak diversification

The 3 months correlation between Replimune and Larimar is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Replimune Group and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics and Replimune 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 Replimune Group 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 Replimune i.e., Replimune and Larimar Therapeutics go up and down completely randomly.

Pair Corralation between Replimune and Larimar Therapeutics

Given the investment horizon of 90 days Replimune Group is expected to generate 0.83 times more return on investment than Larimar Therapeutics. However, Replimune Group is 1.2 times less risky than Larimar Therapeutics. It trades about -0.05 of its potential returns per unit of risk. Larimar Therapeutics is currently generating about -0.15 per unit of risk. If you would invest  1,233  in Replimune Group on December 30, 2024 and sell it today you would lose (194.00) from holding Replimune Group or give up 15.73% of portfolio value over 90 days.

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

Replimune Group  vs.  Larimar Therapeutics

Replimune Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Replimune Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 Replimune and Larimar Therapeutics

The main advantage of trading using opposite Replimune and Larimar Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Replimune 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 Replimune Group 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 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.