Correlation Between CARGOJET INC and Lifeway Foods

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

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

Diversification Opportunities for CARGOJET INC and Lifeway Foods

0.57

Correlation Coefficient

CARGOJET INC  Lifeway Foods

Very weak diversification

The 3 months correlation between CARGOJET and Lifeway is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CARGOJET INC VAR and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and CARGOJET INC 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 CARGOJET INC VAR 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 CARGOJET INC i.e., CARGOJET INC and Lifeway Foods go up and down completely randomly.

Pair Corralation between CARGOJET INC and Lifeway Foods

Assuming the 90 days trading horizon CARGOJET INC VAR is expected to under-perform the Lifeway Foods. But the stock apears to be less risky and, when comparing its historical volatility, CARGOJET INC VAR is 1.02 times less risky than Lifeway Foods. The stock trades about -0.15 of its potential returns per unit of risk. The Lifeway Foods is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,260  in Lifeway Foods on December 30, 2024 and sell it today you would lose (40.00) from holding Lifeway Foods or give up 1.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CARGOJET INC VAR  vs.  Lifeway Foods

CARGOJET INC VAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARGOJET INC VAR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lifeway Foods

Risk-Adjusted Performance

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 CARGOJET INC and Lifeway Foods

The main advantage of trading using opposite CARGOJET INC and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARGOJET INC 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 CARGOJET INC VAR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.