Correlation Between Lixte Biotechnology and Alnylam Pharmaceuticals

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

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

Diversification Opportunities for Lixte Biotechnology and Alnylam Pharmaceuticals

-0.49

Correlation Coefficient

Lixte Biotechnology  Alnylam Pharmaceuticals

Very good diversification

The 3 months correlation between Lixte and Alnylam is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lixte Biotechnology Holdings and Alnylam Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alnylam Pharmaceuticals and Lixte Biotechnology 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 Lixte Biotechnology Holdings are associated (or correlated) with Alnylam Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alnylam Pharmaceuticals has no effect on the direction of Lixte Biotechnology i.e., Lixte Biotechnology and Alnylam Pharmaceuticals go up and down completely randomly.

Pair Corralation between Lixte Biotechnology and Alnylam Pharmaceuticals

Given the investment horizon of 90 days Lixte Biotechnology Holdings is expected to under-perform the Alnylam Pharmaceuticals. In addition to that, Lixte Biotechnology is 2.56 times more volatile than Alnylam Pharmaceuticals. It trades about -0.1 of its total potential returns per unit of risk. Alnylam Pharmaceuticals is currently generating about -0.02 per unit of volatility. If you would invest  15,356  in Alnylam Pharmaceuticals on February 5, 2024 and sell it today you would lose (123.00) from holding Alnylam Pharmaceuticals or give up 0.8% of portfolio value over 90 days.

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

Lixte Biotechnology Holdings  vs.  Alnylam Pharmaceuticals

Lixte Biotechnology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lixte Biotechnology Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lixte Biotechnology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alnylam Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alnylam Pharmaceuticals 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lixte Biotechnology and Alnylam Pharmaceuticals

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

The idea behind Lixte Biotechnology Holdings and Alnylam Pharmaceuticals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.