Correlation Between LION ONE and LIFEWAY FOODS

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

By analyzing existing cross correlation between LION ONE METALS and LIFEWAY FOODS, you can compare the effects of market volatilities on LION ONE and LIFEWAY FOODS 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 LION ONE with a short position of LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and LIFEWAY FOODS.

Diversification Opportunities for LION ONE and LIFEWAY FOODS

0.35

Correlation Coefficient

LION ONE  LIFEWAY FOODS

Weak diversification

The 3 months correlation between LION and LIFEWAY is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS and LION ONE 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 LION ONE METALS are associated (or correlated) with LIFEWAY FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFEWAY FOODS has no effect on the direction of LION ONE i.e., LION ONE and LIFEWAY FOODS go up and down completely randomly.

Pair Corralation between LION ONE and LIFEWAY FOODS

Assuming the 90 days trading horizon LION ONE METALS is expected to generate 2.41 times more return on investment than LIFEWAY FOODS. However, LION ONE is 2.41 times more volatile than LIFEWAY FOODS. It trades about 0.1 of its potential returns per unit of risk. LIFEWAY FOODS is currently generating about 0.01 per unit of risk. If you would invest  15.00  in LION ONE METALS on December 30, 2024 and sell it today you would earn a total of  5.00  from holding LION ONE METALS or generate 33.33% return on investment over 90 days.

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

LION ONE METALS  vs.  LIFEWAY FOODS

LION ONE METALS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LION ONE METALS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, LION ONE unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with LION ONE and LIFEWAY FOODS

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

The idea behind LION ONE METALS and LIFEWAY FOODS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.