Correlation Between LIFEWAY FOODS and CHRISTIAN DIOR

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

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

Diversification Opportunities for LIFEWAY FOODS and CHRISTIAN DIOR

0.29

Correlation Coefficient

LIFEWAY FOODS  CHRISTIAN DIOR

Modest diversification

The 3 months correlation between LIFEWAY and CHRISTIAN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and CHRISTIAN DIOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHRISTIAN DIOR 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 CHRISTIAN DIOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHRISTIAN DIOR has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and CHRISTIAN DIOR go up and down completely randomly.

Pair Corralation between LIFEWAY FOODS and CHRISTIAN DIOR

Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 1.55 times more return on investment than CHRISTIAN DIOR. However, LIFEWAY FOODS is 1.55 times more volatile than CHRISTIAN DIOR. It trades about 0.01 of its potential returns per unit of risk. CHRISTIAN DIOR is currently generating about -0.06 per unit of risk. If you would invest  2,140  in LIFEWAY FOODS on December 24, 2024 and sell it today you would lose (20.00) from holding LIFEWAY FOODS or give up 0.93% of portfolio value over 90 days.

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

LIFEWAY FOODS  vs.  CHRISTIAN DIOR

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 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.

CHRISTIAN DIOR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHRISTIAN DIOR 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.

Pair Trading with LIFEWAY FOODS and CHRISTIAN DIOR

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

The idea behind LIFEWAY FOODS and CHRISTIAN DIOR 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.