Correlation Between Catalyst Pharmaceuticals and Lumos Pharma
Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals and Lumos Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and Lumos Pharma, you can compare the effects of market volatilities on Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals with a short position of Lumos Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and Lumos Pharma.
Diversification Opportunities for Catalyst Pharmaceuticals and Lumos Pharma
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catalyst and Lumos is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Catalyst 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 Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Lumos Pharma go up and down completely randomly.
Pair Corralation between Catalyst Pharmaceuticals and Lumos Pharma
Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 1.09 times less return on investment than Lumos Pharma. But when comparing it to its historical volatility, Catalyst Pharmaceuticals is 1.82 times less risky than Lumos Pharma. It trades about 0.07 of its potential returns per unit of risk. Lumos Pharma is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 317.00 in Lumos Pharma on August 28, 2024 and sell it today you would earn a total of 113.00 from holding Lumos Pharma or generate 35.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Pharmaceuticals vs. Lumos Pharma
Performance |
| Timeline |
| Catalyst Pharmaceuticals |
| Lumos Pharma |
Catalyst Pharmaceuticals and Lumos Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Pharmaceuticals and Lumos Pharma
The main advantage of trading using opposite Catalyst Pharmaceuticals and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals 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.| Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme Pharma |
| Lumos Pharma vs. Shattuck Labs | Lumos Pharma vs. Eliem Therapeutics | Lumos Pharma vs. Champions Oncology | Lumos Pharma vs. Century Therapeutics |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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