Correlation Between Lifecore Biomedical and Regencell Bioscience

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

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

Diversification Opportunities for Lifecore Biomedical and Regencell Bioscience

0.05

Correlation Coefficient

Lifecore Biomedical  Regencell Bioscience

Significant diversification

The 3 months correlation between Lifecore and Regencell is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Regencell Bioscience Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regencell Bioscience 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 Regencell Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regencell Bioscience has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Regencell Bioscience go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Regencell Bioscience

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 0.47 times more return on investment than Regencell Bioscience. However, Lifecore Biomedical is 2.11 times less risky than Regencell Bioscience. It trades about 0.22 of its potential returns per unit of risk. Regencell Bioscience Holdings is currently generating about 0.04 per unit of risk. If you would invest  437.00  in Lifecore Biomedical on August 31, 2024 and sell it today you would earn a total of  313.00  from holding Lifecore Biomedical or generate 71.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Lifecore Biomedical  vs.  Regencell Bioscience Holdings

Lifecore Biomedical

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Lifecore Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Regencell Bioscience

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regencell Bioscience Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Regencell Bioscience exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifecore Biomedical and Regencell Bioscience

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

The idea behind Lifecore Biomedical and Regencell Bioscience Holdings 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.