Correlation Between Small Cap and LakeShore Biopharma

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

By analyzing existing cross correlation between Small Cap Premium and LakeShore Biopharma Co,, you can compare the effects of market volatilities on Small Cap and LakeShore Biopharma 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 Small Cap with a short position of LakeShore Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and LakeShore Biopharma.

Diversification Opportunities for Small Cap and LakeShore Biopharma

-0.41

Correlation Coefficient

Small Cap  LakeShore Biopharma

Very good diversification

The 3 months correlation between Small and LakeShore is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and LakeShore Biopharma Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LakeShore Biopharma Co, and Small Cap 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 Small Cap Premium are associated (or correlated) with LakeShore Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LakeShore Biopharma Co, has no effect on the direction of Small Cap i.e., Small Cap and LakeShore Biopharma go up and down completely randomly.

Pair Corralation between Small Cap and LakeShore Biopharma

Considering the 90-day investment horizon Small Cap Premium is expected to generate 0.05 times more return on investment than LakeShore Biopharma. However, Small Cap Premium is 22.09 times less risky than LakeShore Biopharma. It trades about 0.05 of its potential returns per unit of risk. LakeShore Biopharma Co, is currently generating about -0.05 per unit of risk. If you would invest  2,404  in Small Cap Premium on September 5, 2024 and sell it today you would earn a total of  37.00  from holding Small Cap Premium or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.06%
Values	Daily Returns

Small Cap Premium  vs.  LakeShore Biopharma Co,

Small Cap Premium

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Premium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LakeShore Biopharma Co,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LakeShore Biopharma Co, 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Small Cap and LakeShore Biopharma

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

The idea behind Small Cap Premium and LakeShore Biopharma 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.