Correlation Between LIFEWAY FOODS and WUXI BIOLOGICS
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS and WUXI BIOLOGICS 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 WUXI BIOLOGICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on LIFEWAY FOODS and WUXI BIOLOGICS 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 WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and WUXI BIOLOGICS.
Diversification Opportunities for LIFEWAY FOODS and WUXI BIOLOGICS
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LIFEWAY and WUXI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 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 WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and WUXI BIOLOGICS go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and WUXI BIOLOGICS
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 1.3 times more return on investment than WUXI BIOLOGICS. However, LIFEWAY FOODS is 1.3 times more volatile than WUXI BIOLOGICS UNSPADR2. It trades about 0.07 of its potential returns per unit of risk. WUXI BIOLOGICS UNSPADR2 is currently generating about -0.03 per unit of risk. If you would invest 555.00 in LIFEWAY FOODS on September 23, 2024 and sell it today you would earn a total of 1,585 from holding LIFEWAY FOODS or generate 285.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFEWAY FOODS vs. WUXI BIOLOGICS UNSPADR2
Performance |
| Timeline |
| LIFEWAY FOODS |
| WUXI BIOLOGICS UNSPADR2 |
LIFEWAY FOODS and WUXI BIOLOGICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and WUXI BIOLOGICS
The main advantage of trading using opposite LIFEWAY FOODS and WUXI BIOLOGICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS position performs unexpectedly, WUXI BIOLOGICS 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 WUXI BIOLOGICS will offset losses from the drop in WUXI BIOLOGICS's long position.| LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc |
| WUXI BIOLOGICS vs. COFCO Joycome Foods | WUXI BIOLOGICS vs. LIFEWAY FOODS | WUXI BIOLOGICS vs. INTER CARS SA | WUXI BIOLOGICS vs. Cal Maine 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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