Correlation Between LIFEWAY FOODS and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS and Japan Tobacco 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 Japan Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Japan Tobacco, you can compare the effects of market volatilities on LIFEWAY FOODS and Japan Tobacco 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Japan Tobacco.
Diversification Opportunities for LIFEWAY FOODS and Japan Tobacco
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LIFEWAY and Japan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Japan Tobacco go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Japan Tobacco
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to under-perform the Japan Tobacco. In addition to that, LIFEWAY FOODS is 1.5 times more volatile than Japan Tobacco. It trades about -0.1 of its total potential returns per unit of risk. Japan Tobacco is currently generating about -0.03 per unit of volatility. If you would invest 2,443 in Japan Tobacco on November 30, 2024 and sell it today you would lose (63.00) from holding Japan Tobacco or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Japan Tobacco
Performance |
| Timeline |
| LIFEWAY FOODS |
| Japan Tobacco |
LIFEWAY FOODS and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Japan Tobacco
The main advantage of trading using opposite LIFEWAY FOODS and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco's long position.| LIFEWAY FOODS vs. Prosiebensat 1 Media | LIFEWAY FOODS vs. Live Nation Entertainment | LIFEWAY FOODS vs. Kingdee International Software | LIFEWAY FOODS vs. Playtech plc |
| Japan Tobacco vs. EEDUCATION ALBERT AB | Japan Tobacco vs. DeVry Education Group | Japan Tobacco vs. TAL Education Group | Japan Tobacco vs. BOSTON BEER A |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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