Correlation Between Lion Biotechnologies and TRACTOR SUPPLY

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

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

Diversification Opportunities for Lion Biotechnologies and TRACTOR SUPPLY

-0.07

Correlation Coefficient

Lion Biotechnologies  TRACTOR SUPPLY

Good diversification

The 3 months correlation between Lion and TRACTOR is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and TRACTOR SUPPLY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRACTOR SUPPLY and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with TRACTOR SUPPLY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRACTOR SUPPLY has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and TRACTOR SUPPLY go up and down completely randomly.

Pair Corralation between Lion Biotechnologies and TRACTOR SUPPLY

Assuming the 90 days trading horizon Lion Biotechnologies is expected to generate 3.56 times more return on investment than TRACTOR SUPPLY. However, Lion Biotechnologies is 3.56 times more volatile than TRACTOR SUPPLY. It trades about 0.03 of its potential returns per unit of risk. TRACTOR SUPPLY is currently generating about 0.06 per unit of risk. If you would invest  570.00  in Lion Biotechnologies on October 12, 2024 and sell it today you would earn a total of  39.00  from holding Lion Biotechnologies or generate 6.84% return on investment over 90 days.

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

Lion Biotechnologies  vs.  TRACTOR SUPPLY

Lion Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TRACTOR SUPPLY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRACTOR SUPPLY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TRACTOR SUPPLY is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lion Biotechnologies and TRACTOR SUPPLY

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

The idea behind Lion Biotechnologies and TRACTOR SUPPLY 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.