Correlation Between Lifeway Foods and BANK CENTRAL
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and BANK CENTRAL 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 Lifeway Foods and BANK CENTRAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and BANK CENTRAL ASIA, you can compare the effects of market volatilities on Lifeway Foods and BANK CENTRAL 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 Lifeway Foods with a short position of BANK CENTRAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and BANK CENTRAL.
Diversification Opportunities for Lifeway Foods and BANK CENTRAL
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lifeway and BANK is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA and Lifeway Foods 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 Lifeway Foods are associated (or correlated) with BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and BANK CENTRAL go up and down completely randomly.
Pair Corralation between Lifeway Foods and BANK CENTRAL
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the BANK CENTRAL. In addition to that, Lifeway Foods is 5.11 times more volatile than BANK CENTRAL ASIA. It trades about -0.12 of its total potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about 0.22 per unit of volatility. If you would invest 59.00 in BANK CENTRAL ASIA on September 24, 2024 and sell it today you would earn a total of 1.00 from holding BANK CENTRAL ASIA or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. BANK CENTRAL ASIA
Performance |
| Timeline |
| Lifeway Foods |
| BANK CENTRAL ASIA |
Lifeway Foods and BANK CENTRAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and BANK CENTRAL
The main advantage of trading using opposite Lifeway Foods and BANK CENTRAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, BANK CENTRAL 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 BANK CENTRAL will offset losses from the drop in BANK CENTRAL's long position.| Lifeway Foods vs. Mowi ASA | Lifeway Foods vs. LEROY SEAFOOD GRUNSPADR | Lifeway Foods vs. Nisshin Seifun Group |
| BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Microsoft |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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