Correlation Between Lifecore Biomedical and Shionogi

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

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

Diversification Opportunities for Lifecore Biomedical and Shionogi

-0.49

Correlation Coefficient

Lifecore Biomedical  Shionogi

Very good diversification

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

Pair Corralation between Lifecore Biomedical and Shionogi

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 1.52 times less return on investment than Shionogi. But when comparing it to its historical volatility, Lifecore Biomedical is 6.53 times less risky than Shionogi. It trades about 0.17 of its potential returns per unit of risk. Shionogi Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,550  in Shionogi Co on September 18, 2024 and sell it today you would lose (3,133) from holding Shionogi Co or give up 68.86% of portfolio value over 90 days.

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

Lifecore Biomedical  vs.  Shionogi Co

Lifecore Biomedical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 13 (%) 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.

Shionogi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Shionogi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifecore Biomedical and Shionogi

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

The idea behind Lifecore Biomedical and Shionogi Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.