Correlation Between Agios Pharm and Lifecore Biomedical

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

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

Diversification Opportunities for Agios Pharm and Lifecore Biomedical

0.57

Correlation Coefficient

Agios Pharm  Lifecore Biomedical

Very weak diversification

The 3 months correlation between Agios and Lifecore is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Agios Pharm and Lifecore Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecore Biomedical and Agios Pharm 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 Agios Pharm are associated (or correlated) with Lifecore Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifecore Biomedical has no effect on the direction of Agios Pharm i.e., Agios Pharm and Lifecore Biomedical go up and down completely randomly.

Pair Corralation between Agios Pharm and Lifecore Biomedical

Given the investment horizon of 90 days Agios Pharm is expected to under-perform the Lifecore Biomedical. But the stock apears to be less risky and, when comparing its historical volatility, Agios Pharm is 1.02 times less risky than Lifecore Biomedical. The stock trades about -0.18 of its potential returns per unit of risk. The Lifecore Biomedical is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  741.00  in Lifecore Biomedical on November 28, 2024 and sell it today you would lose (165.00) from holding Lifecore Biomedical or give up 22.27% of portfolio value over 90 days.

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

Agios Pharm  vs.  Lifecore Biomedical

Agios Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lifecore Biomedical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lifecore Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Agios Pharm and Lifecore Biomedical

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

The idea behind Agios Pharm and Lifecore Biomedical 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.