Correlation Between Lifecore Biomedical and Aquestive Therapeutics

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

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

Diversification Opportunities for Lifecore Biomedical and Aquestive Therapeutics

0.62

Correlation Coefficient

Lifecore Biomedical  Aquestive Therapeutics

Poor diversification

The 3 months correlation between Lifecore and Aquestive is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Lifecore Biomedical 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 Lifecore Biomedical are associated (or correlated) with Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Aquestive Therapeutics

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 0.93 times more return on investment than Aquestive Therapeutics. However, Lifecore Biomedical is 1.08 times less risky than Aquestive Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  742.00  in Lifecore Biomedical on December 30, 2024 and sell it today you would lose (57.00) from holding Lifecore Biomedical or give up 7.68% of portfolio value over 90 days.

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

Lifecore Biomedical  vs.  Aquestive Therapeutics

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 relatively invariable fundamental indicators, Lifecore Biomedical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Aquestive Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquestive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Lifecore Biomedical and Aquestive Therapeutics

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

The idea behind Lifecore Biomedical and Aquestive Therapeutics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.