Correlation Between Seres Therapeutics and Lumos Pharma
Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics 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 Seres Therapeutics and Lumos Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seres Therapeutics and Lumos Pharma, you can compare the effects of market volatilities on Seres Therapeutics 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 Seres Therapeutics with a short position of Lumos Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and Lumos Pharma.
Diversification Opportunities for Seres Therapeutics and Lumos Pharma
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seres and Lumos is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Seres 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 Seres Therapeutics 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 Seres Therapeutics i.e., Seres Therapeutics and Lumos Pharma go up and down completely randomly.
Pair Corralation between Seres Therapeutics and Lumos Pharma
Given the investment horizon of 90 days Seres Therapeutics is expected to generate 7.27 times more return on investment than Lumos Pharma. However, Seres Therapeutics is 7.27 times more volatile than Lumos Pharma. It trades about 0.08 of its potential returns per unit of risk. Lumos Pharma is currently generating about -0.03 per unit of risk. If you would invest 71.00 in Seres Therapeutics on August 25, 2024 and sell it today you would earn a total of 6.00 from holding Seres Therapeutics or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seres Therapeutics vs. Lumos Pharma
Performance |
| Timeline |
| Seres Therapeutics |
| Lumos Pharma |
Seres Therapeutics and Lumos Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seres Therapeutics and Lumos Pharma
The main advantage of trading using opposite Seres Therapeutics and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics 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.| Seres Therapeutics vs. Syros Pharmaceuticals | Seres Therapeutics vs. Iovance Biotherapeutics | Seres Therapeutics vs. Veracyte | Seres Therapeutics vs. Fate Therapeutics |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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