Correlation Between LakeShore Biopharma and Viemed Healthcare

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

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

Diversification Opportunities for LakeShore Biopharma and Viemed Healthcare

0.2

Correlation Coefficient

LakeShore Biopharma  Viemed Healthcare

Modest diversification

The 3 months correlation between LakeShore and Viemed is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding LakeShore Biopharma Co, and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare and LakeShore Biopharma 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 LakeShore Biopharma Co, are associated (or correlated) with Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of LakeShore Biopharma i.e., LakeShore Biopharma and Viemed Healthcare go up and down completely randomly.

Pair Corralation between LakeShore Biopharma and Viemed Healthcare

Assuming the 90 days horizon LakeShore Biopharma Co, is expected to generate 13.68 times more return on investment than Viemed Healthcare. However, LakeShore Biopharma is 13.68 times more volatile than Viemed Healthcare. It trades about 0.04 of its potential returns per unit of risk. Viemed Healthcare is currently generating about -0.08 per unit of risk. If you would invest  8.00  in LakeShore Biopharma Co, on December 30, 2024 and sell it today you would lose (3.89) from holding LakeShore Biopharma Co, or give up 48.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.81%
Values	Daily Returns

LakeShore Biopharma Co,  vs.  Viemed Healthcare

LakeShore Biopharma Co,

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LakeShore Biopharma Co, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, LakeShore Biopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Viemed Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with LakeShore Biopharma and Viemed Healthcare

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

The idea behind LakeShore Biopharma Co, and Viemed Healthcare 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.