Correlation Between Lifeway Foods and Diamyd Medical
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Diamyd Medical 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 Diamyd Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Diamyd Medical AB, you can compare the effects of market volatilities on Lifeway Foods and Diamyd Medical 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 Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Diamyd Medical.
Diversification Opportunities for Lifeway Foods and Diamyd Medical
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lifeway and Diamyd is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB 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 Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Diamyd Medical go up and down completely randomly.
Pair Corralation between Lifeway Foods and Diamyd Medical
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the Diamyd Medical. But the stock apears to be less risky and, when comparing its historical volatility, Lifeway Foods is 2.68 times less risky than Diamyd Medical. The stock trades about -0.12 of its potential returns per unit of risk. The Diamyd Medical AB is currently generating about 0.36 of returns per unit of risk over similar time horizon. 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 |
Lifeway Foods vs. Diamyd Medical AB
Performance |
| Timeline |
| Lifeway Foods |
| Diamyd Medical AB |
Lifeway Foods and Diamyd Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Diamyd Medical
The main advantage of trading using opposite Lifeway Foods and Diamyd Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Diamyd Medical 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 Diamyd Medical will offset losses from the drop in Diamyd Medical's long position.| Lifeway Foods vs. Mowi ASA | Lifeway Foods vs. LEROY SEAFOOD GRUNSPADR | Lifeway Foods vs. Lery Seafood Group | Lifeway Foods vs. Nisshin Seifun Group |
| Diamyd Medical vs. INDO RAMA SYNTHETIC | Diamyd Medical vs. Quaker Chemical | Diamyd Medical vs. PTT Global Chemical | Diamyd Medical vs. XTANT MEDICAL HLDGS |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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