Correlation Between Lidds AB and IRLAB Therapeutics

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

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

Diversification Opportunities for Lidds AB and IRLAB Therapeutics

-0.88

Correlation Coefficient

Lidds AB  IRLAB Therapeutics

Pay attention - limited upside

The 3 months correlation between Lidds and IRLAB is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lidds AB and IRLAB Therapeutics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRLAB Therapeutics and Lidds AB 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 Lidds AB are associated (or correlated) with IRLAB Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRLAB Therapeutics has no effect on the direction of Lidds AB i.e., Lidds AB and IRLAB Therapeutics go up and down completely randomly.

Pair Corralation between Lidds AB and IRLAB Therapeutics

Assuming the 90 days trading horizon Lidds AB is expected to generate 2.66 times more return on investment than IRLAB Therapeutics. However, Lidds AB is 2.66 times more volatile than IRLAB Therapeutics AB. It trades about 0.14 of its potential returns per unit of risk. IRLAB Therapeutics AB is currently generating about -0.16 per unit of risk. If you would invest  4.90  in Lidds AB on April 22, 2025 and sell it today you would earn a total of  3.88  from holding Lidds AB or generate 79.18% return on investment over 90 days.

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

Lidds AB  vs.  IRLAB Therapeutics AB

Lidds AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lidds AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lidds AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

IRLAB Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days IRLAB Therapeutics AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lidds AB and IRLAB Therapeutics

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

The idea behind Lidds AB and IRLAB Therapeutics AB 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.