Correlation Between Lifecore Biomedical and Eliem Therapeutics
Can any of the company-specific risk be diversified away by investing in both Lifecore Biomedical and Eliem 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 Eliem 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 Eliem Therapeutics, you can compare the effects of market volatilities on Lifecore Biomedical and Eliem 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 Eliem Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifecore Biomedical and Eliem Therapeutics.
Diversification Opportunities for Lifecore Biomedical and Eliem Therapeutics
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lifecore and Eliem is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem 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 Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Eliem Therapeutics go up and down completely randomly.
Pair Corralation between Lifecore Biomedical and Eliem Therapeutics
Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 2.65 times less return on investment than Eliem Therapeutics. But when comparing it to its historical volatility, Lifecore Biomedical is 1.45 times less risky than Eliem Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Eliem Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 298.00 in Eliem Therapeutics on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Eliem Therapeutics or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Lifecore Biomedical vs. Eliem Therapeutics
Performance |
| Timeline |
| Lifecore Biomedical |
| Eliem Therapeutics |
Lifecore Biomedical and Eliem Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifecore Biomedical and Eliem Therapeutics
The main advantage of trading using opposite Lifecore Biomedical and Eliem Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifecore Biomedical position performs unexpectedly, Eliem 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 Eliem Therapeutics will offset losses from the drop in Eliem Therapeutics' long position.The idea behind Lifecore Biomedical and Eliem 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.| Eliem Therapeutics vs. Pmv Pharmaceuticals | Eliem Therapeutics vs. MediciNova | Eliem Therapeutics vs. Pharvaris BV | Eliem Therapeutics vs. PepGen |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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