Correlation Between LIFEWAY FOODS and Transurban

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

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

Diversification Opportunities for LIFEWAY FOODS and Transurban

0.24

Correlation Coefficient

LIFEWAY FOODS  Transurban

Modest diversification

The 3 months correlation between LIFEWAY and Transurban is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and Transurban go up and down completely randomly.

Pair Corralation between LIFEWAY FOODS and Transurban

Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 7.82 times less return on investment than Transurban. In addition to that, LIFEWAY FOODS is 2.26 times more volatile than Transurban Group. It trades about 0.03 of its total potential returns per unit of risk. Transurban Group is currently generating about 0.58 per unit of volatility. If you would invest  729.00  in Transurban Group on October 7, 2024 and sell it today you would earn a total of  77.00  from holding Transurban Group or generate 10.56% return on investment over 90 days.

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

LIFEWAY FOODS  vs.  Transurban Group

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. 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.

Transurban Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transurban Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Transurban 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 Transurban

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

The idea behind LIFEWAY FOODS and Transurban Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.