Correlation Between AVRO Old and Lexicon Pharmaceuticals

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

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

Diversification Opportunities for AVRO Old and Lexicon Pharmaceuticals

0.0

Correlation Coefficient

AVRO Old  Lexicon Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between AVRO and Lexicon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AVRO Old and Lexicon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexicon Pharmaceuticals and AVRO Old 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 AVRO Old are associated (or correlated) with Lexicon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexicon Pharmaceuticals has no effect on the direction of AVRO Old i.e., AVRO Old and Lexicon Pharmaceuticals go up and down completely randomly.

Pair Corralation between AVRO Old and Lexicon Pharmaceuticals

If you would invest  50.00  in Lexicon Pharmaceuticals on February 7, 2025 and sell it today you would earn a total of  18.91  from holding Lexicon Pharmaceuticals or generate 37.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AVRO Old  vs.  Lexicon Pharmaceuticals

AVRO Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVRO Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AVRO Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Lexicon Pharmaceuticals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lexicon Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lexicon Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AVRO Old and Lexicon Pharmaceuticals

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

The idea behind AVRO Old and Lexicon 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.