Correlation Between Lifetime Brands and FGI Industries

Can any of the company-specific risk be diversified away by investing in both Lifetime Brands and FGI Industries 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 Lifetime Brands and FGI Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Lifetime Brands and FGI Industries

0.12

Correlation Coefficient

Lifetime Brands  FGI Industries

Average diversification

The 3 months correlation between Lifetime and FGI is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lifetime Brands and FGI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FGI Industries and Lifetime Brands 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 Lifetime Brands are associated (or correlated) with FGI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FGI Industries has no effect on the direction of Lifetime Brands i.e., Lifetime Brands and FGI Industries go up and down completely randomly.

Pair Corralation between Lifetime Brands and FGI Industries

Given the investment horizon of 90 days Lifetime Brands is expected to under-perform the FGI Industries. But the stock apears to be less risky and, when comparing its historical volatility, Lifetime Brands is 1.13 times less risky than FGI Industries. The stock trades about -0.02 of its potential returns per unit of risk. The FGI Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  80.00  in FGI Industries on December 28, 2024 and sell it today you would earn a total of  8.00  from holding FGI Industries or generate 10.0% return on investment over 90 days.

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

Lifetime Brands  vs.  FGI Industries

Lifetime Brands

Risk-Adjusted Performance

Very Weak

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

FGI Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FGI Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, FGI Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifetime Brands and FGI Industries

The main advantage of trading using opposite Lifetime Brands and FGI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifetime Brands position performs unexpectedly, FGI Industries 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 FGI Industries will offset losses from the drop in FGI Industries' long position.

The idea behind Lifetime Brands and FGI Industries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.