Correlation Between LIFEWAY FOODS and Nanjing Panda
Can any of the company-specific risk be diversified away by investing in both LIFEWAY FOODS and Nanjing Panda 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 Nanjing Panda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFEWAY FOODS and Nanjing Panda Electronics, you can compare the effects of market volatilities on LIFEWAY FOODS and Nanjing Panda 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 Nanjing Panda. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Nanjing Panda.
Diversification Opportunities for LIFEWAY FOODS and Nanjing Panda
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LIFEWAY and Nanjing is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Nanjing Panda Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Panda Electronics 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 Nanjing Panda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Panda Electronics has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Nanjing Panda go up and down completely randomly.
Pair Corralation between LIFEWAY FOODS and Nanjing Panda
Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 1.87 times less return on investment than Nanjing Panda. But when comparing it to its historical volatility, LIFEWAY FOODS is 1.48 times less risky than Nanjing Panda. It trades about 0.09 of its potential returns per unit of risk. Nanjing Panda Electronics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Nanjing Panda Electronics on November 2, 2024 and sell it today you would earn a total of 11.00 from holding Nanjing Panda Electronics or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.03% |
| Values | Daily Returns |
LIFEWAY FOODS vs. Nanjing Panda Electronics
Performance |
| Timeline |
| LIFEWAY FOODS |
| Nanjing Panda Electronics |
LIFEWAY FOODS and Nanjing Panda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFEWAY FOODS and Nanjing Panda
The main advantage of trading using opposite LIFEWAY FOODS and Nanjing Panda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFEWAY FOODS position performs unexpectedly, Nanjing Panda 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 Nanjing Panda will offset losses from the drop in Nanjing Panda's long position.| LIFEWAY FOODS vs. DIVERSIFIED ROYALTY | LIFEWAY FOODS vs. SLR Investment Corp | LIFEWAY FOODS vs. New Residential Investment | LIFEWAY FOODS vs. Japan Asia Investment |
| Nanjing Panda vs. AMAG Austria Metall | Nanjing Panda vs. Fortescue Metals Group | Nanjing Panda vs. IMPERIAL TOBACCO | Nanjing Panda vs. URBAN OUTFITTERS |
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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