Correlation Between LIFEWAY FOODS and Aluminumof China

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

By analyzing existing cross correlation between LIFEWAY FOODS and Aluminum of, you can compare the effects of market volatilities on LIFEWAY FOODS and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and Aluminumof China.

Diversification Opportunities for LIFEWAY FOODS and Aluminumof China

-0.36

Correlation Coefficient

LIFEWAY FOODS  Aluminumof China

Very good diversification

The 3 months correlation between LIFEWAY and Aluminumof is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Aluminumof China go up and down completely randomly.

Pair Corralation between LIFEWAY FOODS and Aluminumof China

Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 2.92 times less return on investment than Aluminumof China. But when comparing it to its historical volatility, LIFEWAY FOODS is 1.01 times less risky than Aluminumof China. It trades about 0.02 of its potential returns per unit of risk. Aluminum of is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Aluminum of on December 29, 2024 and sell it today you would earn a total of  4.00  from holding Aluminum of or generate 7.14% return on investment over 90 days.

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

LIFEWAY FOODS  vs.  Aluminum of

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.

Aluminumof China

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aluminumof China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LIFEWAY FOODS and Aluminumof China

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

The idea behind LIFEWAY FOODS and Aluminum of 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.