Correlation Between Lyra Therapeutics and Orchestra BioMed

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

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

Diversification Opportunities for Lyra Therapeutics and Orchestra BioMed

0.2

Correlation Coefficient

Lyra Therapeutics  Orchestra BioMed

Modest diversification

The 3 months correlation between Lyra and Orchestra is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lyra Therapeutics and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings and Lyra 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 Lyra Therapeutics are associated (or correlated) with Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Lyra Therapeutics i.e., Lyra Therapeutics and Orchestra BioMed go up and down completely randomly.

Pair Corralation between Lyra Therapeutics and Orchestra BioMed

Given the investment horizon of 90 days Lyra Therapeutics is expected to under-perform the Orchestra BioMed. In addition to that, Lyra Therapeutics is 1.33 times more volatile than Orchestra BioMed Holdings. It trades about -0.05 of its total potential returns per unit of risk. Orchestra BioMed Holdings is currently generating about -0.01 per unit of volatility. If you would invest  627.00  in Orchestra BioMed Holdings on September 3, 2024 and sell it today you would lose (64.00) from holding Orchestra BioMed Holdings or give up 10.21% of portfolio value over 90 days.

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

Lyra Therapeutics  vs.  Orchestra BioMed Holdings

Lyra Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyra Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Orchestra BioMed Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lyra Therapeutics and Orchestra BioMed

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

The idea behind Lyra Therapeutics and Orchestra BioMed Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.