Correlation Between Rezolute and Lisata Therapeutics

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

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

Diversification Opportunities for Rezolute and Lisata Therapeutics

0.2

Correlation Coefficient

Rezolute  Lisata Therapeutics

Modest diversification

The 3 months correlation between Rezolute and Lisata is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Rezolute and Lisata Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisata Therapeutics and Rezolute 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 Rezolute 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 Rezolute i.e., Rezolute and Lisata Therapeutics go up and down completely randomly.

Pair Corralation between Rezolute and Lisata Therapeutics

Given the investment horizon of 90 days Rezolute is expected to generate 4.78 times less return on investment than Lisata Therapeutics. But when comparing it to its historical volatility, Rezolute is 1.38 times less risky than Lisata Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Lisata Therapeutics is currently generating about 0.27 of returns per unit of risk over similar time horizon. 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Rezolute  vs.  Lisata Therapeutics

Rezolute

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rezolute are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Rezolute unveiled 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 Rezolute and Lisata Therapeutics

The main advantage of trading using opposite Rezolute and Lisata Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rezolute 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 Rezolute 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.