Correlation Between Lohilo Foods and Lifeclean International
Can any of the company-specific risk be diversified away by investing in both Lohilo Foods and Lifeclean International 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 Lohilo Foods and Lifeclean International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lohilo Foods AB and Lifeclean International AB, you can compare the effects of market volatilities on Lohilo Foods and Lifeclean International 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 Lohilo Foods with a short position of Lifeclean International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lohilo Foods and Lifeclean International.
Diversification Opportunities for Lohilo Foods and Lifeclean International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lohilo and Lifeclean is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lohilo Foods AB and Lifeclean International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeclean International and Lohilo Foods 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 Lohilo Foods AB are associated (or correlated) with Lifeclean International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeclean International has no effect on the direction of Lohilo Foods i.e., Lohilo Foods and Lifeclean International go up and down completely randomly.
Pair Corralation between Lohilo Foods and Lifeclean International
Assuming the 90 days trading horizon Lohilo Foods AB is expected to generate 0.64 times more return on investment than Lifeclean International. However, Lohilo Foods AB is 1.56 times less risky than Lifeclean International. It trades about -0.11 of its potential returns per unit of risk. Lifeclean International AB is currently generating about -0.19 per unit of risk. If you would invest 207.00 in Lohilo Foods AB on September 5, 2024 and sell it today you would lose (64.00) from holding Lohilo Foods AB or give up 30.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lohilo Foods AB vs. Lifeclean International AB
Performance |
Timeline |
Lohilo Foods AB |
Lifeclean International |
Lohilo Foods and Lifeclean International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lohilo Foods and Lifeclean International
The main advantage of trading using opposite Lohilo Foods and Lifeclean International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lohilo Foods position performs unexpectedly, Lifeclean International 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 Lifeclean International will offset losses from the drop in Lifeclean International's long position.Lohilo Foods vs. Smart Eye AB | Lohilo Foods vs. Kamux Suomi Oy | Lohilo Foods vs. Zignsec AB | Lohilo Foods vs. Harvia Oyj |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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