Correlation Between Lifecore Biomedical and China SXT

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

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

Diversification Opportunities for Lifecore Biomedical and China SXT

-0.26

Correlation Coefficient

Lifecore Biomedical  China SXT

Very good diversification

The 3 months correlation between Lifecore and China is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and China SXT Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China SXT Pharmaceuticals 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 China SXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China SXT Pharmaceuticals has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and China SXT go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and China SXT

Given the investment horizon of 90 days Lifecore Biomedical is expected to under-perform the China SXT. But the stock apears to be less risky and, when comparing its historical volatility, Lifecore Biomedical is 5.14 times less risky than China SXT. The stock trades about -0.01 of its potential returns per unit of risk. The China SXT Pharmaceuticals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  352.00  in China SXT Pharmaceuticals on December 29, 2024 and sell it today you would lose (77.00) from holding China SXT Pharmaceuticals or give up 21.87% of portfolio value over 90 days.

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

Lifecore Biomedical  vs.  China SXT Pharmaceuticals

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.

China SXT Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China SXT Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, China SXT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifecore Biomedical and China SXT

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

The idea behind Lifecore Biomedical and China SXT Pharmaceuticals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.