Correlation Between Lexaria Bioscience and Scpharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Lexaria Bioscience and Scpharmaceuticals 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 Lexaria Bioscience and Scpharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexaria Bioscience Corp and Scpharmaceuticals, you can compare the effects of market volatilities on Lexaria Bioscience and Scpharmaceuticals 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 Lexaria Bioscience with a short position of Scpharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexaria Bioscience and Scpharmaceuticals.
Diversification Opportunities for Lexaria Bioscience and Scpharmaceuticals
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lexaria and Scpharmaceuticals is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lexaria Bioscience Corp and Scpharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scpharmaceuticals and Lexaria Bioscience 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 Lexaria Bioscience Corp are associated (or correlated) with Scpharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scpharmaceuticals has no effect on the direction of Lexaria Bioscience i.e., Lexaria Bioscience and Scpharmaceuticals go up and down completely randomly.
Pair Corralation between Lexaria Bioscience and Scpharmaceuticals
Assuming the 90 days horizon Lexaria Bioscience Corp is expected to generate 17.67 times more return on investment than Scpharmaceuticals. However, Lexaria Bioscience is 17.67 times more volatile than Scpharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Scpharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest 50.00 in Lexaria Bioscience Corp on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Lexaria Bioscience Corp or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.8% |
| Values | Daily Returns |
Lexaria Bioscience Corp vs. Scpharmaceuticals
Performance |
| Timeline |
| Lexaria Bioscience Corp |
| Scpharmaceuticals |
Lexaria Bioscience and Scpharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexaria Bioscience and Scpharmaceuticals
The main advantage of trading using opposite Lexaria Bioscience and Scpharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexaria Bioscience position performs unexpectedly, Scpharmaceuticals 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 Scpharmaceuticals will offset losses from the drop in Scpharmaceuticals' long position.| Lexaria Bioscience vs. Lexaria Bioscience Corp | Lexaria Bioscience vs. Lixte Biotechnology Holdings | Lexaria Bioscience vs. GeoVax Labs | Lexaria Bioscience vs. Reviva Pharmaceuticals Holdings |
| Scpharmaceuticals vs. DiaMedica Therapeutics | Scpharmaceuticals vs. Lyra Therapeutics | Scpharmaceuticals vs. Centessa Pharmaceuticals PLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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