Correlation Between LIFEWAY FOODS and Lenovo Group
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS and Lenovo Group 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 Lenovo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Lenovo Group Limited, you can compare the effects of market volatilities on LIFEWAY FOODS and Lenovo Group 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 Lenovo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Lenovo Group.
Diversification Opportunities for LIFEWAY FOODS and Lenovo Group
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFEWAY and Lenovo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Lenovo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenovo Group Limited 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 Lenovo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenovo Group Limited has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Lenovo Group go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Lenovo Group
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 2.07 times more return on investment than Lenovo Group. However, LIFEWAY FOODS is 2.07 times more volatile than Lenovo Group Limited. It trades about 0.08 of its potential returns per unit of risk. Lenovo Group Limited is currently generating about 0.05 per unit of risk. If you would invest 525.00 in LIFEWAY FOODS on September 12, 2024 and sell it today you would earn a total of 1,735 from holding LIFEWAY FOODS or generate 330.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Lenovo Group Limited
Performance |
| Timeline |
| LIFEWAY FOODS |
| Lenovo Group Limited |
LIFEWAY FOODS and Lenovo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Lenovo Group
The main advantage of trading using opposite LIFEWAY FOODS and Lenovo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS position performs unexpectedly, Lenovo Group 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 Lenovo Group will offset losses from the drop in Lenovo Group's long position.| LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc | LIFEWAY FOODS vs. Apple Inc |
| Lenovo Group vs. LIFEWAY FOODS | Lenovo Group vs. PACIFIC ONLINE | Lenovo Group vs. Ebro Foods SA | Lenovo Group vs. United Natural 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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