Correlation Between Exicure and Lumos Pharma

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

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

Diversification Opportunities for Exicure and Lumos Pharma

0.31

Correlation Coefficient

Exicure  Lumos Pharma

Weak diversification

The 3 months correlation between Exicure and Lumos is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Exicure and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Exicure 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 Exicure are associated (or correlated) with Lumos Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumos Pharma has no effect on the direction of Exicure i.e., Exicure and Lumos Pharma go up and down completely randomly.

Pair Corralation between Exicure and Lumos Pharma

Given the investment horizon of 90 days Exicure is expected to generate 2.44 times more return on investment than Lumos Pharma. However, Exicure is 2.44 times more volatile than Lumos Pharma. It trades about 0.08 of its potential returns per unit of risk. Lumos Pharma is currently generating about 0.03 per unit of risk. If you would invest  583.00  in Exicure on August 31, 2024 and sell it today you would earn a total of  2,616  from holding Exicure or generate 448.71% return on investment over 90 days.

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

Exicure  vs.  Lumos Pharma

Exicure

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exicure are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Exicure reported solid returns over the last few months and may actually be approaching a breakup point.

Lumos Pharma

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lumos Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Lumos Pharma may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Exicure and Lumos Pharma

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

The idea behind Exicure and Lumos Pharma 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.

Check out your portfolio center.

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.