Correlation Between Equillium and Lyra TherapeuticsInc

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

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

Diversification Opportunities for Equillium and Lyra TherapeuticsInc

0.67

Correlation Coefficient

Equillium  Lyra TherapeuticsInc

Poor diversification

The 3 months correlation between Equillium and Lyra is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Lyra TherapeuticsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyra TherapeuticsInc and Equillium 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 Equillium are associated (or correlated) with Lyra TherapeuticsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyra TherapeuticsInc has no effect on the direction of Equillium i.e., Equillium and Lyra TherapeuticsInc go up and down completely randomly.

Pair Corralation between Equillium and Lyra TherapeuticsInc

Allowing for the 90-day total investment horizon Equillium is expected to generate 1.3 times more return on investment than Lyra TherapeuticsInc. However, Equillium is 1.3 times more volatile than Lyra TherapeuticsInc. It trades about -0.22 of its potential returns per unit of risk. Lyra TherapeuticsInc is currently generating about -0.31 per unit of risk. If you would invest  211.00  in Equillium on January 30, 2024 and sell it today you would lose (46.00) from holding Equillium or give up 21.8% of portfolio value over 90 days.

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

Equillium  vs.  Lyra TherapeuticsInc

Equillium

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Lyra TherapeuticsInc

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lyra TherapeuticsInc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Lyra TherapeuticsInc may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Equillium and Lyra TherapeuticsInc

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

The idea behind Equillium and Lyra TherapeuticsInc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.