Correlation Between Lifeline Biotechnologies and Armm

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

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

Diversification Opportunities for Lifeline Biotechnologies and Armm

0.0

Correlation Coefficient

Lifeline Biotechnologies  Armm

Pay attention - limited upside

The 3 months correlation between Lifeline and Armm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lifeline Biotechnologies and Armm Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armm Inc and Lifeline Biotechnologies 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 Lifeline Biotechnologies are associated (or correlated) with Armm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armm Inc has no effect on the direction of Lifeline Biotechnologies i.e., Lifeline Biotechnologies and Armm go up and down completely randomly.

Pair Corralation between Lifeline Biotechnologies and Armm

Given the investment horizon of 90 days Lifeline Biotechnologies is expected to generate 2.17 times more return on investment than Armm. However, Lifeline Biotechnologies is 2.17 times more volatile than Armm Inc. It trades about 0.14 of its potential returns per unit of risk. Armm Inc is currently generating about 0.04 per unit of risk. If you would invest  0.02  in Lifeline Biotechnologies on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Lifeline Biotechnologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.06%
Values	Daily Returns

Lifeline Biotechnologies  vs.  Armm Inc

Lifeline Biotechnologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifeline Biotechnologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Lifeline Biotechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Armm Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armm Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Armm is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lifeline Biotechnologies and Armm

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

The idea behind Lifeline Biotechnologies and Armm Inc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.