Correlation Between La Jolla and DiaMedica Therapeutics
Can any of the company-specific risk be diversified away by investing in both La Jolla and DiaMedica Therapeutics 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 La Jolla and DiaMedica Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between La Jolla Pharmaceutical and DiaMedica Therapeutics, you can compare the effects of market volatilities on La Jolla and DiaMedica Therapeutics 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 La Jolla with a short position of DiaMedica Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Jolla and DiaMedica Therapeutics.
Diversification Opportunities for La Jolla and DiaMedica Therapeutics
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LJPC and DiaMedica is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding La Jolla Pharmaceutical and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics and La Jolla 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 La Jolla Pharmaceutical are associated (or correlated) with DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of La Jolla i.e., La Jolla and DiaMedica Therapeutics go up and down completely randomly.
Pair Corralation between La Jolla and DiaMedica Therapeutics
If you would invest 622.00 in La Jolla Pharmaceutical on December 29, 2023 and sell it today you would earn a total of 0.00 from holding La Jolla Pharmaceutical or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 4.55% |
Values | Daily Returns |
La Jolla Pharmaceutical vs. DiaMedica Therapeutics
Performance |
Timeline |
La Jolla Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
DiaMedica Therapeutics |
La Jolla and DiaMedica Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with La Jolla and DiaMedica Therapeutics
The main advantage of trading using opposite La Jolla and DiaMedica Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Jolla position performs unexpectedly, DiaMedica Therapeutics 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 DiaMedica Therapeutics will offset losses from the drop in DiaMedica Therapeutics' long position.La Jolla vs. Bausch Lomb Corp | La Jolla vs. Eastern Co | La Jolla vs. Calliditas Therapeutics | La Jolla vs. Skechers USA |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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