Correlation Between Brasilagro Adr and Lifeway Foods

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

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

Diversification Opportunities for Brasilagro Adr and Lifeway Foods

0.55

Correlation Coefficient

Brasilagro Adr  Lifeway Foods

Very weak diversification

The 3 months correlation between Brasilagro and Lifeway is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Brasilagro Adr and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods and Brasilagro Adr 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 Brasilagro Adr 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 Brasilagro Adr i.e., Brasilagro Adr and Lifeway Foods go up and down completely randomly.

Pair Corralation between Brasilagro Adr and Lifeway Foods

Considering the 90-day investment horizon Brasilagro Adr is expected to generate 0.72 times more return on investment than Lifeway Foods. However, Brasilagro Adr is 1.4 times less risky than Lifeway Foods. It trades about -0.11 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.1 per unit of risk. If you would invest  395.00  in Brasilagro Adr on December 1, 2024 and sell it today you would lose (38.00) from holding Brasilagro Adr or give up 9.62% of portfolio value over 90 days.

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

Brasilagro Adr  vs.  Lifeway Foods

Brasilagro Adr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brasilagro Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Brasilagro Adr and Lifeway Foods

The main advantage of trading using opposite Brasilagro Adr and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brasilagro Adr 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 Brasilagro Adr 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.