Correlation Between Lexicon Pharmaceuticals and BioLineRx
Can any of the company-specific risk be diversified away by investing in both Lexicon Pharmaceuticals and BioLineRx 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 Lexicon Pharmaceuticals and BioLineRx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexicon Pharmaceuticals and BioLineRx, you can compare the effects of market volatilities on Lexicon Pharmaceuticals and BioLineRx 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 Lexicon Pharmaceuticals with a short position of BioLineRx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexicon Pharmaceuticals and BioLineRx.
Diversification Opportunities for Lexicon Pharmaceuticals and BioLineRx
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lexicon and BioLineRx is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lexicon Pharmaceuticals and BioLineRx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLineRx and Lexicon 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 Lexicon Pharmaceuticals are associated (or correlated) with BioLineRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLineRx has no effect on the direction of Lexicon Pharmaceuticals i.e., Lexicon Pharmaceuticals and BioLineRx go up and down completely randomly.
Pair Corralation between Lexicon Pharmaceuticals and BioLineRx
Given the investment horizon of 90 days Lexicon Pharmaceuticals is expected to under-perform the BioLineRx. But the stock apears to be less risky and, when comparing its historical volatility, Lexicon Pharmaceuticals is 1.13 times less risky than BioLineRx. The stock trades about -0.34 of its potential returns per unit of risk. The BioLineRx is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 44.00 in BioLineRx on August 28, 2024 and sell it today you would lose (17.00) from holding BioLineRx or give up 38.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lexicon Pharmaceuticals vs. BioLineRx
Performance |
| Timeline |
| Lexicon Pharmaceuticals |
| BioLineRx |
Lexicon Pharmaceuticals and BioLineRx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexicon Pharmaceuticals and BioLineRx
The main advantage of trading using opposite Lexicon Pharmaceuticals and BioLineRx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexicon Pharmaceuticals position performs unexpectedly, BioLineRx 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 BioLineRx will offset losses from the drop in BioLineRx's long position.| Lexicon Pharmaceuticals vs. BioLineRx | Lexicon Pharmaceuticals vs. Ardelyx | Lexicon Pharmaceuticals vs. Seres Therapeutics | Lexicon Pharmaceuticals vs. Immunitybio |
| BioLineRx vs. Ardelyx | BioLineRx vs. Lexicon Pharmaceuticals | BioLineRx vs. Seres Therapeutics | BioLineRx vs. Immunitybio |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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