Correlation Between Diamyd Medical and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and Lifeway Foods 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 Diamyd Medical and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and Lifeway Foods, you can compare the effects of market volatilities on Diamyd Medical and Lifeway Foods 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 Diamyd Medical with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Lifeway Foods.
Diversification Opportunities for Diamyd Medical and Lifeway Foods
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diamyd and Lifeway is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and Diamyd Medical 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 Diamyd Medical AB are associated (or correlated) with Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Lifeway Foods go up and down completely randomly.
Pair Corralation between Diamyd Medical and Lifeway Foods
Assuming the 90 days horizon Diamyd Medical AB is expected to generate 2.68 times more return on investment than Lifeway Foods. However, Diamyd Medical is 2.68 times more volatile than Lifeway Foods. It trades about 0.36 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.12 per unit of risk. If you would invest 95.00 in Diamyd Medical AB on September 24, 2024 and sell it today you would earn a total of 41.00 from holding Diamyd Medical AB or generate 43.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Lifeway Foods
Performance |
| Timeline |
| Diamyd Medical AB |
| Lifeway Foods |
Diamyd Medical and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Lifeway Foods
The main advantage of trading using opposite Diamyd Medical and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Diamyd Medical vs. Novo Nordisk AS | Diamyd Medical vs. Mercedes Benz Group AG | Diamyd Medical vs. Vertex Pharmaceuticals Incorporated | Diamyd Medical vs. Moderna |
| Lifeway Foods vs. Mowi ASA | Lifeway Foods vs. LEROY SEAFOOD GRUNSPADR | Lifeway Foods vs. Lery Seafood Group | Lifeway Foods vs. Nisshin Seifun Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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