Correlation Between Takeda Pharmaceutical and LIFEWAY FOODS

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

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

Diversification Opportunities for Takeda Pharmaceutical and LIFEWAY FOODS

-0.28

Correlation Coefficient

Takeda Pharmaceutical  LIFEWAY FOODS

Very good diversification

The 3 months correlation between Takeda and LIFEWAY is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS and Takeda Pharmaceutical 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 Takeda Pharmaceutical 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 Takeda Pharmaceutical i.e., Takeda Pharmaceutical and LIFEWAY FOODS go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and LIFEWAY FOODS

Assuming the 90 days trading horizon Takeda Pharmaceutical is expected to generate 0.64 times more return on investment than LIFEWAY FOODS. However, Takeda Pharmaceutical is 1.55 times less risky than LIFEWAY FOODS. It trades about 0.08 of its potential returns per unit of risk. LIFEWAY FOODS is currently generating about -0.1 per unit of risk. If you would invest  1,280  in Takeda Pharmaceutical on November 29, 2024 and sell it today you would earn a total of  80.00  from holding Takeda Pharmaceutical or generate 6.25% return on investment over 90 days.

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

Takeda Pharmaceutical  vs.  LIFEWAY FOODS

Takeda Pharmaceutical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Takeda Pharmaceutical may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Takeda Pharmaceutical and LIFEWAY FOODS

The main advantage of trading using opposite Takeda Pharmaceutical and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Takeda Pharmaceutical 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 Takeda Pharmaceutical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.