Correlation Between Theriva Biologics and Lumos Pharma

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

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

Diversification Opportunities for Theriva Biologics and Lumos Pharma

-0.46

Correlation Coefficient

Theriva Biologics  Lumos Pharma

Very good diversification

The 3 months correlation between Theriva and Lumos is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Theriva Biologics and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Theriva Biologics 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 Theriva Biologics 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 Theriva Biologics i.e., Theriva Biologics and Lumos Pharma go up and down completely randomly.

Pair Corralation between Theriva Biologics and Lumos Pharma

Given the investment horizon of 90 days Theriva Biologics is expected to under-perform the Lumos Pharma. In addition to that, Theriva Biologics is 3.24 times more volatile than Lumos Pharma. It trades about -0.13 of its total potential returns per unit of risk. Lumos Pharma is currently generating about 0.07 per unit of volatility. If you would invest  387.00  in Lumos Pharma on September 15, 2024 and sell it today you would earn a total of  47.00  from holding Lumos Pharma or generate 12.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Theriva Biologics  vs.  Lumos Pharma

Theriva Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Theriva Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly 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.

Lumos Pharma

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lumos Pharma are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Lumos Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Theriva Biologics and Lumos Pharma

The main advantage of trading using opposite Theriva Biologics and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Theriva Biologics 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 Theriva Biologics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..