Correlation Between Aptose Biosciences and Lifecore Biomedical

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

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

Diversification Opportunities for Aptose Biosciences and Lifecore Biomedical

-0.26

Correlation Coefficient

Aptose Biosciences  Lifecore Biomedical

Very good diversification

The 3 months correlation between Aptose and Lifecore is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and Lifecore Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecore Biomedical and Aptose Biosciences 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 Aptose Biosciences 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 Aptose Biosciences i.e., Aptose Biosciences and Lifecore Biomedical go up and down completely randomly.

Pair Corralation between Aptose Biosciences and Lifecore Biomedical

Given the investment horizon of 90 days Aptose Biosciences is expected to generate 29.88 times more return on investment than Lifecore Biomedical. However, Aptose Biosciences is 29.88 times more volatile than Lifecore Biomedical. It trades about 0.12 of its potential returns per unit of risk. Lifecore Biomedical is currently generating about -0.08 per unit of risk. If you would invest  18.00  in Aptose Biosciences on November 28, 2024 and sell it today you would lose (7.00) from holding Aptose Biosciences or give up 38.89% of portfolio value over 90 days.

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

Aptose Biosciences  vs.  Lifecore Biomedical

Aptose Biosciences

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aptose Biosciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aptose Biosciences displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Aptose Biosciences and Lifecore Biomedical

The main advantage of trading using opposite Aptose Biosciences and Lifecore Biomedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptose Biosciences 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 Aptose Biosciences 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.