Correlation Between Cue Biopharma and Lyra Therapeutics

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

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

Diversification Opportunities for Cue Biopharma and Lyra Therapeutics

0.2

Correlation Coefficient

Cue Biopharma  Lyra Therapeutics

Modest diversification

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

Pair Corralation between Cue Biopharma and Lyra Therapeutics

Considering the 90-day investment horizon Cue Biopharma is expected to generate 1.18 times more return on investment than Lyra Therapeutics. However, Cue Biopharma is 1.18 times more volatile than Lyra Therapeutics. It trades about -0.22 of its potential returns per unit of risk. Lyra Therapeutics is currently generating about -0.46 per unit of risk. If you would invest  208.00  in Cue Biopharma on March 7, 2024 and sell it today you would lose (52.00) from holding Cue Biopharma or give up 25.0% of portfolio value over 90 days.

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

Cue Biopharma  vs.  Lyra Therapeutics

Cue Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cue Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cue Biopharma and Lyra Therapeutics

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

The idea behind Cue Biopharma and Lyra Therapeutics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.