Correlation Between Compass Therapeutics and Lifecore Biomedical

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

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

Diversification Opportunities for Compass Therapeutics and Lifecore Biomedical

-0.34

Correlation Coefficient

Compass Therapeutics  Lifecore Biomedical

Very good diversification

The 3 months correlation between Compass and Lifecore is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Compass Therapeutics and Lifecore Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecore Biomedical and Compass Therapeutics 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 Compass Therapeutics are associated (or correlated) with Lifecore Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifecore Biomedical has no effect on the direction of Compass Therapeutics i.e., Compass Therapeutics and Lifecore Biomedical go up and down completely randomly.

Pair Corralation between Compass Therapeutics and Lifecore Biomedical

Given the investment horizon of 90 days Compass Therapeutics is expected to generate 27.91 times less return on investment than Lifecore Biomedical. In addition to that, Compass Therapeutics is 1.44 times more volatile than Lifecore Biomedical. It trades about 0.0 of its total potential returns per unit of risk. Lifecore Biomedical is currently generating about 0.15 per unit of volatility. If you would invest  617.00  in Lifecore Biomedical on February 23, 2025 and sell it today you would earn a total of  55.00  from holding Lifecore Biomedical or generate 8.91% return on investment over 90 days.

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

Compass Therapeutics  vs.  Lifecore Biomedical

Compass Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compass Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lifecore Biomedical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 6 (%) 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.

Pair Trading with Compass Therapeutics and Lifecore Biomedical

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

The idea behind Compass Therapeutics and Lifecore Biomedical 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.