Correlation Between Lumos Pharma and HCW Biologics
Can any of the company-specific risk be diversified away by investing in both Lumos Pharma and HCW Biologics 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 Lumos Pharma and HCW Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumos Pharma and HCW Biologics, you can compare the effects of market volatilities on Lumos Pharma and HCW Biologics 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 Lumos Pharma with a short position of HCW Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumos Pharma and HCW Biologics.
Diversification Opportunities for Lumos Pharma and HCW Biologics
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lumos and HCW is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lumos Pharma and HCW Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCW Biologics and Lumos Pharma 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 Lumos Pharma are associated (or correlated) with HCW Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCW Biologics has no effect on the direction of Lumos Pharma i.e., Lumos Pharma and HCW Biologics go up and down completely randomly.
Pair Corralation between Lumos Pharma and HCW Biologics
Given the investment horizon of 90 days Lumos Pharma is expected to under-perform the HCW Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Lumos Pharma is 73.0 times less risky than HCW Biologics. The stock trades about -0.13 of its potential returns per unit of risk. The HCW Biologics is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 45.00 in HCW Biologics on August 29, 2024 and sell it today you would earn a total of 11.00 from holding HCW Biologics or generate 24.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumos Pharma vs. HCW Biologics
Performance |
| Timeline |
| Lumos Pharma |
| HCW Biologics |
Lumos Pharma and HCW Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumos Pharma and HCW Biologics
The main advantage of trading using opposite Lumos Pharma and HCW Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumos Pharma position performs unexpectedly, HCW Biologics 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 HCW Biologics will offset losses from the drop in HCW Biologics' long position.| Lumos Pharma vs. Shattuck Labs | Lumos Pharma vs. Eliem Therapeutics | Lumos Pharma vs. Champions Oncology | Lumos Pharma vs. Century Therapeutics |
| HCW Biologics vs. Eliem Therapeutics | HCW Biologics vs. Scpharmaceuticals | HCW Biologics vs. Milestone Pharmaceuticals | HCW Biologics vs. Seres 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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