Correlation Between Larimar Therapeutics and Surrozen

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

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

Diversification Opportunities for Larimar Therapeutics and Surrozen

0.08

Correlation Coefficient

Larimar Therapeutics  Surrozen

Significant diversification

The 3 months correlation between Larimar and Surrozen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Larimar Therapeutics and Surrozen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surrozen and Larimar 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 Larimar Therapeutics are associated (or correlated) with Surrozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surrozen has no effect on the direction of Larimar Therapeutics i.e., Larimar Therapeutics and Surrozen go up and down completely randomly.

Pair Corralation between Larimar Therapeutics and Surrozen

Given the investment horizon of 90 days Larimar Therapeutics is expected to generate 12.32 times less return on investment than Surrozen. But when comparing it to its historical volatility, Larimar Therapeutics is 1.21 times less risky than Surrozen. It trades about 0.0 of its potential returns per unit of risk. Surrozen is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,062  in Surrozen on August 31, 2024 and sell it today you would lose (40.00) from holding Surrozen or give up 3.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Larimar Therapeutics  vs.  Surrozen

Larimar Therapeutics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Larimar Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Larimar Therapeutics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Surrozen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Surrozen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Surrozen may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Larimar Therapeutics and Surrozen

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

The idea behind Larimar Therapeutics and Surrozen 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.