Correlation Between Lupatech and Tyson Foods

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

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

Diversification Opportunities for Lupatech and Tyson Foods

0.06

Correlation Coefficient

Lupatech  Tyson Foods

Significant diversification

The 3 months correlation between Lupatech and Tyson is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Lupatech 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 Lupatech SA are associated (or correlated) with Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Lupatech i.e., Lupatech and Tyson Foods go up and down completely randomly.

Pair Corralation between Lupatech and Tyson Foods

Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Tyson Foods. In addition to that, Lupatech is 1.55 times more volatile than Tyson Foods. It trades about -0.08 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.03 per unit of volatility. If you would invest  36,200  in Tyson Foods on August 31, 2024 and sell it today you would earn a total of  911.00  from holding Tyson Foods or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Lupatech SA  vs.  Tyson Foods

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tyson Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tyson Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lupatech and Tyson Foods

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

The idea behind Lupatech SA and Tyson 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.