Correlation Between Lifecore Biomedical and Sunshine Biopharma

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

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

Diversification Opportunities for Lifecore Biomedical and Sunshine Biopharma

0.32

Correlation Coefficient

Lifecore Biomedical  Sunshine Biopharma

Weak diversification

The 3 months correlation between Lifecore and Sunshine is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Sunshine Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunshine Biopharma 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 Sunshine Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunshine Biopharma has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Sunshine Biopharma go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Sunshine Biopharma

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 0.93 times more return on investment than Sunshine Biopharma. However, Lifecore Biomedical is 1.07 times less risky than Sunshine Biopharma. It trades about -0.01 of its potential returns per unit of risk. Sunshine Biopharma is currently generating about -0.11 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lifecore Biomedical  vs.  Sunshine Biopharma

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.

Sunshine Biopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunshine Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Pair Trading with Lifecore Biomedical and Sunshine Biopharma

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

The idea behind Lifecore Biomedical and Sunshine Biopharma 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..