Correlation Between Lifeway Foods and TITANIUM TRANSPORTGROUP

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

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

Diversification Opportunities for Lifeway Foods and TITANIUM TRANSPORTGROUP

-0.28

Correlation Coefficient

Lifeway Foods  TITANIUM TRANSPORTGROUP

Very good diversification

The 3 months correlation between Lifeway and TITANIUM is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and TITANIUM TRANSPORTGROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITANIUM TRANSPORTGROUP and Lifeway Foods 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 Lifeway Foods are associated (or correlated) with TITANIUM TRANSPORTGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITANIUM TRANSPORTGROUP has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and TITANIUM TRANSPORTGROUP go up and down completely randomly.

Pair Corralation between Lifeway Foods and TITANIUM TRANSPORTGROUP

Assuming the 90 days horizon Lifeway Foods is expected to under-perform the TITANIUM TRANSPORTGROUP. In addition to that, Lifeway Foods is 1.16 times more volatile than TITANIUM TRANSPORTGROUP. It trades about -0.22 of its total potential returns per unit of risk. TITANIUM TRANSPORTGROUP is currently generating about -0.05 per unit of volatility. If you would invest  153.00  in TITANIUM TRANSPORTGROUP on October 5, 2024 and sell it today you would lose (2.00) from holding TITANIUM TRANSPORTGROUP or give up 1.31% of portfolio value over 90 days.

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

Lifeway Foods  vs.  TITANIUM TRANSPORTGROUP

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

TITANIUM TRANSPORTGROUP

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Lifeway Foods and TITANIUM TRANSPORTGROUP

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

The idea behind Lifeway Foods and TITANIUM TRANSPORTGROUP 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.