Correlation Between Lifecore Biomedical and Cyclo Therapeutics

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

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

Diversification Opportunities for Lifecore Biomedical and Cyclo Therapeutics

-0.25

Correlation Coefficient

Lifecore Biomedical  Cyclo Therapeutics

Very good diversification

The 3 months correlation between Lifecore and Cyclo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Cyclo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyclo Therapeutics and Lifecore Biomedical 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 Lifecore Biomedical are associated (or correlated) with Cyclo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyclo Therapeutics has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Cyclo Therapeutics go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Cyclo Therapeutics

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 0.93 times more return on investment than Cyclo Therapeutics. However, Lifecore Biomedical is 1.07 times less risky than Cyclo Therapeutics. It trades about 0.2 of its potential returns per unit of risk. Cyclo Therapeutics is currently generating about 0.01 per unit of risk. If you would invest  458.00  in Lifecore Biomedical on September 5, 2024 and sell it today you would earn a total of  289.00  from holding Lifecore Biomedical or generate 63.1% return on investment over 90 days.

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

Lifecore Biomedical  vs.  Cyclo Therapeutics

Lifecore Biomedical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Lifecore Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Cyclo Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclo Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cyclo Therapeutics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Lifecore Biomedical and Cyclo Therapeutics

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

The idea behind Lifecore Biomedical and Cyclo 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.