Correlation Between ZIJIN MINH and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both ZIJIN MINH 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 ZIJIN MINH and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZIJIN MINH UNSPADR20 and Lifeway Foods, you can compare the effects of market volatilities on ZIJIN MINH 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 ZIJIN MINH with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZIJIN MINH and Lifeway Foods.
Diversification Opportunities for ZIJIN MINH and Lifeway Foods
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZIJIN and Lifeway is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ZIJIN MINH UNSPADR20 and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and ZIJIN MINH 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 ZIJIN MINH UNSPADR20 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 ZIJIN MINH i.e., ZIJIN MINH and Lifeway Foods go up and down completely randomly.
Pair Corralation between ZIJIN MINH and Lifeway Foods
Assuming the 90 days trading horizon ZIJIN MINH UNSPADR20 is expected to generate 0.65 times more return on investment than Lifeway Foods. However, ZIJIN MINH UNSPADR20 is 1.53 times less risky than Lifeway Foods. It trades about 0.09 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.02 per unit of risk. If you would invest 3,760 in ZIJIN MINH UNSPADR20 on September 2, 2024 and sell it today you would earn a total of 200.00 from holding ZIJIN MINH UNSPADR20 or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ZIJIN MINH UNSPADR20 vs. Lifeway Foods
Performance |
| Timeline |
| ZIJIN MINH UNSPADR20 |
| Lifeway Foods |
ZIJIN MINH and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZIJIN MINH and Lifeway Foods
The main advantage of trading using opposite ZIJIN MINH and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZIJIN MINH 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.| ZIJIN MINH vs. MEDICAL FACILITIES NEW | ZIJIN MINH vs. ADRIATIC METALS LS 013355 | ZIJIN MINH vs. AECOM TECHNOLOGY | ZIJIN MINH vs. X FAB Silicon Foundries |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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