Correlation Between Khiron Life and Lifeway Foods

Can any of the company-specific risk be diversified away by investing in both Khiron Life 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 Khiron Life and Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Khiron Life Sciences and Lifeway Foods, you can compare the effects of market volatilities on Khiron Life 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 Khiron Life with a short position of Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Khiron Life and Lifeway Foods.

Diversification Opportunities for Khiron Life and Lifeway Foods

0.0

Correlation Coefficient

Khiron Life  Lifeway Foods

Pay attention - limited upside

The 3 months correlation between Khiron and Lifeway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Khiron Life Sciences and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and Khiron Life 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 Khiron Life Sciences 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 Khiron Life i.e., Khiron Life and Lifeway Foods go up and down completely randomly.

Pair Corralation between Khiron Life and Lifeway Foods

Assuming the 90 days trading horizon Khiron Life Sciences is expected to under-perform the Lifeway Foods. But the stock apears to be less risky and, when comparing its historical volatility, Khiron Life Sciences is 1.34 times less risky than Lifeway Foods. The stock trades about -0.04 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  540.00  in Lifeway Foods on October 4, 2024 and sell it today you would earn a total of  1,720  from holding Lifeway Foods or generate 318.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Khiron Life Sciences  vs.  Lifeway Foods

Khiron Life Sciences

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Khiron Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Khiron Life is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lifeway Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeway Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lifeway Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Khiron Life and Lifeway Foods

The main advantage of trading using opposite Khiron Life and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Khiron Life 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.

The idea behind Khiron Life Sciences and Lifeway Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.