Correlation Between XOMA and Lisata Therapeutics

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

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

Diversification Opportunities for XOMA and Lisata Therapeutics

-0.46

Correlation Coefficient

XOMA  Lisata Therapeutics

Very good diversification

The 3 months correlation between XOMA and Lisata is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Lisata Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisata Therapeutics and XOMA 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 XOMA Corporation 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 XOMA i.e., XOMA and Lisata Therapeutics go up and down completely randomly.

Pair Corralation between XOMA and Lisata Therapeutics

Assuming the 90 days horizon XOMA Corporation is expected to generate 0.05 times more return on investment than Lisata Therapeutics. However, XOMA Corporation is 21.39 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 0.0 per unit of risk. If you would invest  2,499  in XOMA Corporation on December 19, 2024 and sell it today you would earn a total of  33.00  from holding XOMA Corporation or generate 1.32% return on investment over 90 days.

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

XOMA Corp.  vs.  Lisata Therapeutics

XOMA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Lisata Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lisata Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lisata Therapeutics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XOMA and Lisata Therapeutics

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

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.