Correlation Between Longboard Pharmaceuticals and Lisata Therapeutics

Can any of the company-specific risk be diversified away by investing in both Longboard Pharmaceuticals and Lisata Therapeutics 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 Longboard Pharmaceuticals and Lisata Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Longboard Pharmaceuticals and Lisata Therapeutics

-0.58

Correlation Coefficient

Longboard Pharmaceuticals  Lisata Therapeutics

Excellent diversification

The 3 months correlation between Longboard and Lisata is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Longboard Pharmaceuticals and Lisata Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisata Therapeutics and Longboard 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 Longboard Pharmaceuticals are associated (or correlated) with Lisata Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lisata Therapeutics has no effect on the direction of Longboard Pharmaceuticals i.e., Longboard Pharmaceuticals and Lisata Therapeutics go up and down completely randomly.

Pair Corralation between Longboard Pharmaceuticals and Lisata Therapeutics

Given the investment horizon of 90 days Longboard Pharmaceuticals is expected to generate 2.47 times more return on investment than Lisata Therapeutics. However, Longboard Pharmaceuticals is 2.47 times more volatile than Lisata Therapeutics. It trades about 0.21 of its potential returns per unit of risk. Lisata Therapeutics is currently generating about -0.07 per unit of risk. If you would invest  2,758  in Longboard Pharmaceuticals on September 17, 2024 and sell it today you would earn a total of  3,240  from holding Longboard Pharmaceuticals or generate 117.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.15%
Values	Daily Returns

Longboard Pharmaceuticals  vs.  Lisata Therapeutics

Longboard Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Longboard Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating basic indicators, Longboard Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lisata Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lisata Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Longboard Pharmaceuticals and Lisata Therapeutics

The main advantage of trading using opposite Longboard Pharmaceuticals and Lisata Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longboard Pharmaceuticals position performs unexpectedly, Lisata Therapeutics 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 Lisata Therapeutics will offset losses from the drop in Lisata Therapeutics' long position.

The idea behind Longboard Pharmaceuticals and Lisata Therapeutics 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.