Correlation Between Toyo Suisan and Lamb Weston

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

By analyzing existing cross correlation between Toyo Suisan Kaisha and Lamb Weston Holdings, you can compare the effects of market volatilities on Toyo Suisan and Lamb Weston 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 Toyo Suisan with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyo Suisan and Lamb Weston.

Diversification Opportunities for Toyo Suisan and Lamb Weston

0.88

Correlation Coefficient

Toyo Suisan  Lamb Weston

Very poor diversification

The 3 months correlation between Toyo and Lamb is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Toyo Suisan Kaisha and Lamb Weston Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamb Weston Holdings and Toyo Suisan 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 Toyo Suisan Kaisha are associated (or correlated) with Lamb Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamb Weston Holdings has no effect on the direction of Toyo Suisan i.e., Toyo Suisan and Lamb Weston go up and down completely randomly.

Pair Corralation between Toyo Suisan and Lamb Weston

If you would invest  7,507  in Lamb Weston Holdings on September 20, 2024 and sell it today you would earn a total of  315.00  from holding Lamb Weston Holdings or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Toyo Suisan Kaisha  vs.  Lamb Weston Holdings

Toyo Suisan Kaisha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toyo Suisan Kaisha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Toyo Suisan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lamb Weston Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lamb Weston Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Lamb Weston showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toyo Suisan and Lamb Weston

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

The idea behind Toyo Suisan Kaisha and Lamb Weston Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.