Correlation Between LIFEWAY FOODS and PT Bank
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS and PT Bank 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 PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and PT Bank Rakyat, you can compare the effects of market volatilities on LIFEWAY FOODS and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and PT Bank.
Diversification Opportunities for LIFEWAY FOODS and PT Bank
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LIFEWAY and BYRA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and PT Bank go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and PT Bank
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 1.47 times more return on investment than PT Bank. However, LIFEWAY FOODS is 1.47 times more volatile than PT Bank Rakyat. It trades about 0.1 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.02 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFEWAY FOODS vs. PT Bank Rakyat
Performance |
| Timeline |
| LIFEWAY FOODS |
| PT Bank Rakyat |
LIFEWAY FOODS and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and PT Bank
The main advantage of trading using opposite LIFEWAY FOODS and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| LIFEWAY FOODS vs. TOTAL GABON | LIFEWAY FOODS vs. Walgreens Boots Alliance | LIFEWAY FOODS vs. Peak Resources Limited |
| PT Bank vs. COMBA TELECOM SYST | PT Bank vs. LIFEWAY FOODS | PT Bank vs. Cal Maine Foods | PT Bank vs. JJ SNACK 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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