Correlation Between Plastic Omnium and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Lifeway Foods, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Lifeway Foods.
Diversification Opportunities for Plastic Omnium and Lifeway Foods
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plastic and Lifeway is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and Lifeway Foods go up and down completely randomly.
Pair Corralation between Plastic Omnium and Lifeway Foods
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the Lifeway Foods. But the stock apears to be less risky and, when comparing its historical volatility, Plastic Omnium is 2.14 times less risky than Lifeway Foods. The stock trades about -0.03 of its potential returns per unit of risk. The Lifeway Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 635.00 in Lifeway Foods on October 16, 2024 and sell it today you would earn a total of 1,605 from holding Lifeway Foods or generate 252.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. Lifeway Foods
Performance |
| Timeline |
| Plastic Omnium |
| Lifeway Foods |
Plastic Omnium and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and Lifeway Foods
The main advantage of trading using opposite Plastic Omnium and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. Monument Mining Limited | Plastic Omnium vs. Easy Software AG | Plastic Omnium vs. Bio Techne Corp | Plastic Omnium vs. Siamgas And Petrochemicals |
| Lifeway Foods vs. Plastic Omnium | Lifeway Foods vs. China Eastern Airlines | Lifeway Foods vs. Nok Airlines PCL | Lifeway Foods vs. JAPAN AIRLINES |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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