Correlation Between Dyadic International and Lumos Pharma

Can any of the company-specific risk be diversified away by investing in both Dyadic International 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 Dyadic International and Lumos Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dyadic International and Lumos Pharma, you can compare the effects of market volatilities on Dyadic International 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 Dyadic International with a short position of Lumos Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dyadic International and Lumos Pharma.

Diversification Opportunities for Dyadic International and Lumos Pharma

0.42

Correlation Coefficient

Dyadic International  Lumos Pharma

Very weak diversification

The 3 months correlation between Dyadic and Lumos is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dyadic International and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Dyadic International 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 Dyadic International 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 Dyadic International i.e., Dyadic International and Lumos Pharma go up and down completely randomly.

Pair Corralation between Dyadic International and Lumos Pharma

Given the investment horizon of 90 days Dyadic International is expected to generate 1.84 times more return on investment than Lumos Pharma. However, Dyadic International is 1.84 times more volatile than Lumos Pharma. It trades about 0.1 of its potential returns per unit of risk. Lumos Pharma is currently generating about 0.1 per unit of risk. If you would invest  116.00  in Dyadic International on September 18, 2024 and sell it today you would earn a total of  33.00  from holding Dyadic International or generate 28.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Dyadic International  vs.  Lumos Pharma

Dyadic International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dyadic International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Dyadic International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lumos Pharma

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lumos Pharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Lumos Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dyadic International and Lumos Pharma

The main advantage of trading using opposite Dyadic International and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dyadic International 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.

The idea behind Dyadic International and Lumos Pharma 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.