Correlation Between Lifecore Biomedical and Alpha Teknova

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

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

Diversification Opportunities for Lifecore Biomedical and Alpha Teknova

0.76

Correlation Coefficient

Lifecore Biomedical  Alpha Teknova

Poor diversification

The 3 months correlation between Lifecore and Alpha is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Alpha Teknova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Teknova 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 Alpha Teknova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Teknova has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Alpha Teknova go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Alpha Teknova

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 0.54 times more return on investment than Alpha Teknova. However, Lifecore Biomedical is 1.84 times less risky than Alpha Teknova. It trades about 0.27 of its potential returns per unit of risk. Alpha Teknova is currently generating about 0.08 per unit of risk. If you would invest  599.00  in Lifecore Biomedical on September 3, 2024 and sell it today you would earn a total of  142.00  from holding Lifecore Biomedical or generate 23.71% return on investment over 90 days.

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

Lifecore Biomedical  vs.  Alpha Teknova

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 conflicting fundamental indicators, Lifecore Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Alpha Teknova

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Teknova are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Alpha Teknova displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifecore Biomedical and Alpha Teknova

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

The idea behind Lifecore Biomedical and Alpha Teknova 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.