Correlation Between Lifecore Biomedical and Scorpius Holdings

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

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

Diversification Opportunities for Lifecore Biomedical and Scorpius Holdings

-0.68

Correlation Coefficient

Lifecore Biomedical  Scorpius Holdings

Excellent diversification

The 3 months correlation between Lifecore and Scorpius is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Scorpius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpius Holdings 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 Scorpius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scorpius Holdings has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Scorpius Holdings go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Scorpius Holdings

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 4.72 times less return on investment than Scorpius Holdings. But when comparing it to its historical volatility, Lifecore Biomedical is 3.17 times less risky than Scorpius Holdings. It trades about 0.08 of its potential returns per unit of risk. Scorpius Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Scorpius Holdings on October 6, 2024 and sell it today you would earn a total of  9.00  from holding Scorpius Holdings or generate 19.57% return on investment over 90 days.

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

Lifecore Biomedical  vs.  Scorpius Holdings

Lifecore Biomedical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 13 (%) 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.

Scorpius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scorpius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Scorpius Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lifecore Biomedical and Scorpius Holdings

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

The idea behind Lifecore Biomedical and Scorpius 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.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.