Correlation Between Lifeway Foods and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Meiko Electronics 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 Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Meiko Electronics Co, you can compare the effects of market volatilities on Lifeway Foods and Meiko Electronics 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 Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Meiko Electronics.
Diversification Opportunities for Lifeway Foods and Meiko Electronics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lifeway and Meiko is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Meiko Electronics go up and down completely randomly.
Pair Corralation between Lifeway Foods and Meiko Electronics
Assuming the 90 days horizon Lifeway Foods is expected to generate 1.53 times more return on investment than Meiko Electronics. However, Lifeway Foods is 1.53 times more volatile than Meiko Electronics Co. It trades about -0.08 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about -0.21 per unit of risk. If you would invest 2,320 in Lifeway Foods on October 15, 2024 and sell it today you would lose (80.00) from holding Lifeway Foods or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Meiko Electronics Co
Performance |
| Timeline |
| Lifeway Foods |
| Meiko Electronics |
Lifeway Foods and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Meiko Electronics
The main advantage of trading using opposite Lifeway Foods and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| Lifeway Foods vs. Plastic Omnium | Lifeway Foods vs. China Eastern Airlines | Lifeway Foods vs. Nok Airlines PCL | Lifeway Foods vs. JAPAN AIRLINES |
| Meiko Electronics vs. CARSALESCOM | Meiko Electronics vs. STEEL DYNAMICS | Meiko Electronics vs. Lamar Advertising | Meiko Electronics vs. Sch Environnement SA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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