Correlation Between Lifeclean International and Lyko Group

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

By analyzing existing cross correlation between Lifeclean International AB and Lyko Group A, you can compare the effects of market volatilities on Lifeclean International and Lyko Group 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 Lifeclean International with a short position of Lyko Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeclean International and Lyko Group.

Diversification Opportunities for Lifeclean International and Lyko Group

0.86

Correlation Coefficient

Lifeclean International  Lyko Group

Very poor diversification

The 3 months correlation between Lifeclean and Lyko is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lifeclean International AB and Lyko Group A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyko Group A and Lifeclean International 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 Lifeclean International AB are associated (or correlated) with Lyko Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyko Group A has no effect on the direction of Lifeclean International i.e., Lifeclean International and Lyko Group go up and down completely randomly.

Pair Corralation between Lifeclean International and Lyko Group

Assuming the 90 days trading horizon Lifeclean International AB is expected to under-perform the Lyko Group. In addition to that, Lifeclean International is 2.09 times more volatile than Lyko Group A. It trades about -0.19 of its total potential returns per unit of risk. Lyko Group A is currently generating about -0.12 per unit of volatility. If you would invest  12,300  in Lyko Group A on September 5, 2024 and sell it today you would lose (2,980) from holding Lyko Group A or give up 24.23% of portfolio value over 90 days.

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

Lifeclean International AB  vs.  Lyko Group A

Lifeclean International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeclean International AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lyko Group A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyko Group A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lifeclean International and Lyko Group

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

The idea behind Lifeclean International AB and Lyko Group A 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.