Correlation Between Peak Resources and LIFEWAY FOODS

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

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

Diversification Opportunities for Peak Resources and LIFEWAY FOODS

0.41

Correlation Coefficient

Peak Resources  LIFEWAY FOODS

Very weak diversification

The 3 months correlation between Peak and LIFEWAY is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS and Peak Resources 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 Peak Resources Limited 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 Peak Resources i.e., Peak Resources and LIFEWAY FOODS go up and down completely randomly.

Pair Corralation between Peak Resources and LIFEWAY FOODS

Assuming the 90 days horizon Peak Resources Limited is expected to generate 2.68 times more return on investment than LIFEWAY FOODS. However, Peak Resources is 2.68 times more volatile than LIFEWAY FOODS. It trades about 0.02 of its potential returns per unit of risk. LIFEWAY FOODS is currently generating about 0.01 per unit of risk. If you would invest  6.30  in Peak Resources Limited on December 29, 2024 and sell it today you would lose (0.50) from holding Peak Resources Limited or give up 7.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Peak Resources Limited  vs.  LIFEWAY FOODS

Peak Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Peak Resources Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Peak Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Peak Resources and LIFEWAY FOODS

The main advantage of trading using opposite Peak Resources and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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 Peak Resources Limited 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.

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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.