Correlation Between Larimar Therapeutics and Fennec Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Larimar Therapeutics and Fennec Pharmaceuticals 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 Larimar Therapeutics and Fennec Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Larimar Therapeutics and Fennec Pharmaceuticals, you can compare the effects of market volatilities on Larimar Therapeutics and Fennec Pharmaceuticals 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 Larimar Therapeutics with a short position of Fennec Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Larimar Therapeutics and Fennec Pharmaceuticals.

Diversification Opportunities for Larimar Therapeutics and Fennec Pharmaceuticals

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Larimar and Fennec is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and Fennec Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fennec Pharmaceuticals and Larimar Therapeutics 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 Larimar Therapeutics are associated (or correlated) with Fennec Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fennec Pharmaceuticals has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and Fennec Pharmaceuticals go up and down completely randomly.

Pair Corralation between Larimar Therapeutics and Fennec Pharmaceuticals

Given the investment horizon of 90 days Larimar Therapeutics is expected to under-perform the Fennec Pharmaceuticals. In addition to that, Larimar Therapeutics is 1.01 times more volatile than Fennec Pharmaceuticals. It trades about 0.0 of its total potential returns per unit of risk. Fennec Pharmaceuticals is currently generating about 0.09 per unit of volatility. If you would invest  520.00  in Fennec Pharmaceuticals on August 28, 2024 and sell it today you would earn a total of  84.00  from holding Fennec Pharmaceuticals or generate 16.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Larimar Therapeutics  vs.  Fennec Pharmaceuticals

 Performance 
       Timeline  
Larimar Therapeutics 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Larimar Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Fennec Pharmaceuticals 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Fennec Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Fennec Pharmaceuticals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Larimar Therapeutics and Fennec Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Larimar Therapeutics and Fennec Pharmaceuticals

The main advantage of trading using opposite Larimar Therapeutics and Fennec Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Larimar Therapeutics position performs unexpectedly, Fennec Pharmaceuticals 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 Fennec Pharmaceuticals will offset losses from the drop in Fennec Pharmaceuticals' long position.
The idea behind Larimar Therapeutics and Fennec Pharmaceuticals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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