Correlation Between Design Therapeutics and LakeShore Biopharma

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

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

Diversification Opportunities for Design Therapeutics and LakeShore Biopharma

-0.29

Correlation Coefficient

Design Therapeutics  LakeShore Biopharma

Very good diversification

The 3 months correlation between Design and LakeShore is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and LakeShore Biopharma Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LakeShore Biopharma Co, and Design Therapeutics 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 Design Therapeutics are associated (or correlated) with LakeShore Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LakeShore Biopharma Co, has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and LakeShore Biopharma go up and down completely randomly.

Pair Corralation between Design Therapeutics and LakeShore Biopharma

Given the investment horizon of 90 days Design Therapeutics is expected to under-perform the LakeShore Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Design Therapeutics is 3.88 times less risky than LakeShore Biopharma. The stock trades about -0.08 of its potential returns per unit of risk. The LakeShore Biopharma Co, is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8.00  in LakeShore Biopharma Co, on December 30, 2024 and sell it today you would lose (3.89) from holding LakeShore Biopharma Co, or give up 48.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.81%
Values	Daily Returns

Design Therapeutics  vs.  LakeShore Biopharma Co,

Design Therapeutics

Risk-Adjusted Performance

Very Weak

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

LakeShore Biopharma Co,

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LakeShore Biopharma Co, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, LakeShore Biopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Design Therapeutics and LakeShore Biopharma

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

The idea behind Design Therapeutics and LakeShore Biopharma Co, 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.