Correlation Between Lantern Pharma and Acumen Pharmaceuticals

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

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

Diversification Opportunities for Lantern Pharma and Acumen Pharmaceuticals

0.01

Correlation Coefficient

Lantern Pharma  Acumen Pharmaceuticals

Significant diversification

The 3 months correlation between Lantern and Acumen is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lantern Pharma and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals and Lantern Pharma 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 Lantern Pharma are associated (or correlated) with Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Lantern Pharma i.e., Lantern Pharma and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Lantern Pharma and Acumen Pharmaceuticals

Given the investment horizon of 90 days Lantern Pharma is expected to generate 0.83 times more return on investment than Acumen Pharmaceuticals. However, Lantern Pharma is 1.2 times less risky than Acumen Pharmaceuticals. It trades about -0.01 of its potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about -0.19 per unit of risk. If you would invest  328.00  in Lantern Pharma on September 5, 2024 and sell it today you would lose (9.00) from holding Lantern Pharma or give up 2.74% of portfolio value over 90 days.

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

Lantern Pharma  vs.  Acumen Pharmaceuticals

Lantern Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantern Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Lantern Pharma is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Acumen Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Acumen Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lantern Pharma and Acumen Pharmaceuticals

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

The idea behind Lantern Pharma and Acumen Pharmaceuticals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.