Correlation Between Durect and Lifecore Biomedical

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

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

Diversification Opportunities for Durect and Lifecore Biomedical

-0.73

Correlation Coefficient

Durect  Lifecore Biomedical

Pay attention - limited upside

The 3 months correlation between Durect and Lifecore is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Durect and Lifecore Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecore Biomedical and Durect 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 Durect 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 Durect i.e., Durect and Lifecore Biomedical go up and down completely randomly.

Pair Corralation between Durect and Lifecore Biomedical

Given the investment horizon of 90 days Durect is expected to under-perform the Lifecore Biomedical. In addition to that, Durect is 1.08 times more volatile than Lifecore Biomedical. It trades about -0.16 of its total potential returns per unit of risk. Lifecore Biomedical is currently generating about 0.23 per unit of volatility. If you would invest  422.00  in Lifecore Biomedical on September 4, 2024 and sell it today you would earn a total of  341.00  from holding Lifecore Biomedical or generate 80.81% return on investment over 90 days.

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

Durect  vs.  Lifecore Biomedical

Durect

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Durect has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lifecore Biomedical

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Lifecore Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Durect and Lifecore Biomedical

The main advantage of trading using opposite Durect and Lifecore Biomedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Durect 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 Durect 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 Commodity Directory module to find actively traded commodities issued by global exchanges.