Correlation Between Armata Pharmaceuticals and Larimar Therapeutics
Can any of the company-specific risk be diversified away by investing in both Armata Pharmaceuticals 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 Armata Pharmaceuticals and Larimar Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armata Pharmaceuticals and Larimar Therapeutics, you can compare the effects of market volatilities on Armata Pharmaceuticals 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 Armata Pharmaceuticals with a short position of Larimar Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armata Pharmaceuticals and Larimar Therapeutics.
Diversification Opportunities for Armata Pharmaceuticals and Larimar Therapeutics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Armata and Larimar is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Armata Pharmaceuticals and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics and Armata Pharmaceuticals 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 Armata Pharmaceuticals 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 Armata Pharmaceuticals i.e., Armata Pharmaceuticals and Larimar Therapeutics go up and down completely randomly.
Pair Corralation between Armata Pharmaceuticals and Larimar Therapeutics
Given the investment horizon of 90 days Armata Pharmaceuticals is expected to generate 1.18 times more return on investment than Larimar Therapeutics. However, Armata Pharmaceuticals is 1.18 times more volatile than Larimar Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Larimar Therapeutics is currently generating about 0.06 per unit of risk. If you would invest 156.00 in Armata Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of 74.00 from holding Armata Pharmaceuticals or generate 47.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armata Pharmaceuticals vs. Larimar Therapeutics
Performance |
| Timeline |
| Armata Pharmaceuticals |
| Larimar Therapeutics |
Armata Pharmaceuticals and Larimar Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armata Pharmaceuticals and Larimar Therapeutics
The main advantage of trading using opposite Armata Pharmaceuticals and Larimar Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armata Pharmaceuticals 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 Armata Pharmaceuticals 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.| Larimar Therapeutics vs. Vaxcyte | Larimar Therapeutics vs. Syndax Pharmaceuticals | Larimar Therapeutics vs. Merus BV | Larimar Therapeutics vs. Sutro Biopharma |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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