Correlation Between LIFEWAY FOODS and Thai Beverage

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

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

Diversification Opportunities for LIFEWAY FOODS and Thai Beverage

0.16

Correlation Coefficient

LIFEWAY FOODS  Thai Beverage

Average diversification

The 3 months correlation between LIFEWAY and Thai is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public 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 Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Thai Beverage go up and down completely randomly.

Pair Corralation between LIFEWAY FOODS and Thai Beverage

Assuming the 90 days trading horizon LIFEWAY FOODS is expected to under-perform the Thai Beverage. In addition to that, LIFEWAY FOODS is 1.25 times more volatile than Thai Beverage Public. It trades about -0.05 of its total potential returns per unit of risk. Thai Beverage Public is currently generating about 0.1 per unit of volatility. If you would invest  36.00  in Thai Beverage Public on September 1, 2024 and sell it today you would earn a total of  2.00  from holding Thai Beverage Public or generate 5.56% return on investment over 90 days.

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

LIFEWAY FOODS  vs.  Thai Beverage Public

LIFEWAY FOODS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LIFEWAY FOODS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, LIFEWAY FOODS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Thai Beverage Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Thai Beverage may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with LIFEWAY FOODS and Thai Beverage

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

The idea behind LIFEWAY FOODS and Thai Beverage Public 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.