Correlation Between Clover Health and Larimar Therapeutics

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

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

Diversification Opportunities for Clover Health and Larimar Therapeutics

-0.58

Correlation Coefficient

Clover Health  Larimar Therapeutics

Excellent diversification

The 3 months correlation between Clover and Larimar is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Clover Health Investments and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics and Clover Health 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 Clover Health Investments are associated (or correlated) with Larimar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Larimar Therapeutics has no effect on the direction of Clover Health i.e., Clover Health and Larimar Therapeutics go up and down completely randomly.

Pair Corralation between Clover Health and Larimar Therapeutics

Given the investment horizon of 90 days Clover Health Investments is expected to under-perform the Larimar Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Clover Health Investments is 1.51 times less risky than Larimar Therapeutics. The stock trades about -0.06 of its potential returns per unit of risk. The Larimar Therapeutics is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Larimar Therapeutics on May 6, 2025 and sell it today you would earn a total of  134.00  from holding Larimar Therapeutics or generate 63.81% return on investment over 90 days.

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

Clover Health Investments  vs.  Larimar Therapeutics

Clover Health Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clover Health Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in September 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Larimar Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Larimar Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, Larimar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clover Health and Larimar Therapeutics

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

The idea behind Clover Health Investments and Larimar 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.