Correlation Between LIFEWAY FOODS and Royal Unibrew
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS and Royal Unibrew 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 Royal Unibrew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Royal Unibrew AS, you can compare the effects of market volatilities on LIFEWAY FOODS and Royal Unibrew 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 Royal Unibrew. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Royal Unibrew.
Diversification Opportunities for LIFEWAY FOODS and Royal Unibrew
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LIFEWAY and Royal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Royal Unibrew AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Unibrew AS 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 Royal Unibrew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Unibrew AS has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Royal Unibrew go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Royal Unibrew
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 2.51 times more return on investment than Royal Unibrew. However, LIFEWAY FOODS is 2.51 times more volatile than Royal Unibrew AS. It trades about 0.1 of its potential returns per unit of risk. Royal Unibrew AS is currently generating about 0.06 per unit of risk. If you would invest 1,220 in LIFEWAY FOODS on September 3, 2024 and sell it today you would earn a total of 1,060 from holding LIFEWAY FOODS or generate 86.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Royal Unibrew AS
Performance |
| Timeline |
| LIFEWAY FOODS |
| Royal Unibrew AS |
LIFEWAY FOODS and Royal Unibrew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Royal Unibrew
The main advantage of trading using opposite LIFEWAY FOODS and Royal Unibrew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS position performs unexpectedly, Royal Unibrew 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 Royal Unibrew will offset losses from the drop in Royal Unibrew's long position.| LIFEWAY FOODS vs. TOTAL GABON | LIFEWAY FOODS vs. Walgreens Boots Alliance | LIFEWAY FOODS vs. Peak Resources Limited |
| Royal Unibrew vs. Goodyear Tire Rubber | Royal Unibrew vs. JJ SNACK FOODS | Royal Unibrew vs. JAPAN TOBACCO UNSPADR12 | Royal Unibrew vs. LIFEWAY FOODS |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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