Correlation Between Lifecore Biomedical and NLS Pharmaceutics

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

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

Diversification Opportunities for Lifecore Biomedical and NLS Pharmaceutics

-0.69

Correlation Coefficient

Lifecore Biomedical  NLS Pharmaceutics

Excellent diversification

The 3 months correlation between Lifecore and NLS is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and NLS Pharmaceutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLS Pharmaceutics 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 NLS Pharmaceutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLS Pharmaceutics has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and NLS Pharmaceutics go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and NLS Pharmaceutics

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 0.48 times more return on investment than NLS Pharmaceutics. However, Lifecore Biomedical is 2.07 times less risky than NLS Pharmaceutics. It trades about 0.08 of its potential returns per unit of risk. NLS Pharmaceutics AG is currently generating about -0.09 per unit of risk. If you would invest  539.00  in Lifecore Biomedical on October 24, 2024 and sell it today you would earn a total of  104.00  from holding Lifecore Biomedical or generate 19.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Lifecore Biomedical  vs.  NLS Pharmaceutics AG

Lifecore Biomedical

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 6 (%) 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.

NLS Pharmaceutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lifecore Biomedical and NLS Pharmaceutics

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

The idea behind Lifecore Biomedical and NLS Pharmaceutics AG 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.