Correlation Between Sanyo Chemical and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and Lifeway Foods 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 Sanyo Chemical and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyo Chemical Industries and Lifeway Foods, you can compare the effects of market volatilities on Sanyo Chemical and Lifeway Foods 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 Sanyo Chemical with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and Lifeway Foods.
Diversification Opportunities for Sanyo Chemical and Lifeway Foods
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sanyo and Lifeway is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and Sanyo Chemical 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 Sanyo Chemical Industries are associated (or correlated) with Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and Lifeway Foods go up and down completely randomly.
Pair Corralation between Sanyo Chemical and Lifeway Foods
Assuming the 90 days horizon Sanyo Chemical Industries is expected to under-perform the Lifeway Foods. But the stock apears to be less risky and, when comparing its historical volatility, Sanyo Chemical Industries is 4.14 times less risky than Lifeway Foods. The stock trades about -0.01 of its potential returns per unit of risk. The Lifeway Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,160 in Lifeway Foods on September 12, 2024 and sell it today you would earn a total of 1,160 from holding Lifeway Foods or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. Lifeway Foods
Performance |
| Timeline |
| Sanyo Chemical Industries |
| Lifeway Foods |
Sanyo Chemical and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and Lifeway Foods
The main advantage of trading using opposite Sanyo Chemical and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Sanyo Chemical vs. Lifeway Foods | Sanyo Chemical vs. Iridium Communications | Sanyo Chemical vs. NISSIN FOODS HLDGS | Sanyo Chemical vs. Moneysupermarket Group PLC |
| Lifeway Foods vs. Hormel Foods | Lifeway Foods vs. Superior Plus Corp | Lifeway Foods vs. SIVERS SEMICONDUCTORS AB | Lifeway Foods vs. NorAm Drilling AS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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