Correlation Between ALERION CLEANPOWER and LIFEWAY FOODS

Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER 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 ALERION CLEANPOWER and LIFEWAY FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALERION CLEANPOWER and LIFEWAY FOODS, you can compare the effects of market volatilities on ALERION CLEANPOWER 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 ALERION CLEANPOWER with a short position of LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and LIFEWAY FOODS.

Diversification Opportunities for ALERION CLEANPOWER and LIFEWAY FOODS

0.76

Correlation Coefficient

ALERION CLEANPOWER  LIFEWAY FOODS

Poor diversification

The 3 months correlation between ALERION and LIFEWAY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER i.e., ALERION CLEANPOWER and LIFEWAY FOODS go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and LIFEWAY FOODS

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the LIFEWAY FOODS. In addition to that, ALERION CLEANPOWER is 1.2 times more volatile than LIFEWAY FOODS. It trades about -0.04 of its total potential returns per unit of risk. LIFEWAY FOODS is currently generating about 0.01 per unit of volatility. If you would invest  2,200  in LIFEWAY FOODS on December 30, 2024 and sell it today you would earn a total of  0.00  from holding LIFEWAY FOODS or generate 0.0% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  LIFEWAY FOODS

ALERION CLEANPOWER

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALERION CLEANPOWER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

LIFEWAY FOODS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LIFEWAY FOODS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LIFEWAY FOODS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ALERION CLEANPOWER and LIFEWAY FOODS

The main advantage of trading using opposite ALERION CLEANPOWER and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER 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's long position.

The idea behind ALERION CLEANPOWER 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..