Correlation Between Lifeway Foods and Mitsui Chemicals
Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Mitsui Chemicals 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 Mitsui Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Mitsui Chemicals, you can compare the effects of market volatilities on Lifeway Foods and Mitsui Chemicals 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 Mitsui Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Mitsui Chemicals.
Diversification Opportunities for Lifeway Foods and Mitsui Chemicals
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lifeway and Mitsui is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Mitsui Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Chemicals 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 Mitsui Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Chemicals has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Mitsui Chemicals go up and down completely randomly.
Pair Corralation between Lifeway Foods and Mitsui Chemicals
Assuming the 90 days horizon Lifeway Foods is expected to under-perform the Mitsui Chemicals. In addition to that, Lifeway Foods is 2.35 times more volatile than Mitsui Chemicals. It trades about 0.0 of its total potential returns per unit of risk. Mitsui Chemicals is currently generating about 0.05 per unit of volatility. If you would invest 2,120 in Mitsui Chemicals on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Mitsui Chemicals or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifeway Foods vs. Mitsui Chemicals
Performance |
| Timeline |
| Lifeway Foods |
| Mitsui Chemicals |
Lifeway Foods and Mitsui Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifeway Foods and Mitsui Chemicals
The main advantage of trading using opposite Lifeway Foods and Mitsui Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Mitsui Chemicals 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 Mitsui Chemicals will offset losses from the drop in Mitsui Chemicals' long position.| Lifeway Foods vs. Danone SA | Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. NMI Holdings | Lifeway Foods vs. Origin Agritech |
| Mitsui Chemicals vs. SIVERS SEMICONDUCTORS AB | Mitsui Chemicals vs. Darden Restaurants | Mitsui Chemicals vs. Reliance Steel Aluminum | Mitsui Chemicals vs. Q2M Managementberatung AG |
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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