Correlation Between Terns Pharmaceuticals and Lantern Pharma
Can any of the company-specific risk be diversified away by investing in both Terns Pharmaceuticals and Lantern 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 Terns Pharmaceuticals and Lantern Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terns Pharmaceuticals and Lantern Pharma, you can compare the effects of market volatilities on Terns Pharmaceuticals and Lantern 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 Terns Pharmaceuticals with a short position of Lantern Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terns Pharmaceuticals and Lantern Pharma.
Diversification Opportunities for Terns Pharmaceuticals and Lantern Pharma
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Terns and Lantern is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Lantern Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantern Pharma and Terns 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 Terns Pharmaceuticals are associated (or correlated) with Lantern Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantern Pharma has no effect on the direction of Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Lantern Pharma go up and down completely randomly.
Pair Corralation between Terns Pharmaceuticals and Lantern Pharma
Given the investment horizon of 90 days Terns Pharmaceuticals is expected to under-perform the Lantern Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Terns Pharmaceuticals is 1.27 times less risky than Lantern Pharma. The stock trades about -0.3 of its potential returns per unit of risk. The Lantern Pharma is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 480.00 in Lantern Pharma on December 6, 2024 and sell it today you would lose (91.00) from holding Lantern Pharma or give up 18.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terns Pharmaceuticals vs. Lantern Pharma
Performance |
| Timeline |
| Terns Pharmaceuticals |
| Lantern Pharma |
Terns Pharmaceuticals and Lantern Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terns Pharmaceuticals and Lantern Pharma
The main advantage of trading using opposite Terns Pharmaceuticals and Lantern Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns Pharmaceuticals position performs unexpectedly, Lantern 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 Lantern Pharma will offset losses from the drop in Lantern Pharma's long position.| Terns Pharmaceuticals vs. Amylyx Pharmaceuticals | ||
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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