Correlation Between LIFEWAY FOODS and WUXI BIOLOGICS

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

By analyzing existing cross correlation between LIFEWAY FOODS and WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on LIFEWAY FOODS and WUXI BIOLOGICS 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 LIFEWAY FOODS with a short position of WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFEWAY FOODS and WUXI BIOLOGICS.

Diversification Opportunities for LIFEWAY FOODS and WUXI BIOLOGICS

0.42

Correlation Coefficient

LIFEWAY FOODS  WUXI BIOLOGICS

Very weak diversification

The 3 months correlation between LIFEWAY and WUXI is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding LIFEWAY FOODS and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 and LIFEWAY 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 LIFEWAY FOODS are associated (or correlated) with WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of LIFEWAY FOODS i.e., LIFEWAY FOODS and WUXI BIOLOGICS go up and down completely randomly.

Pair Corralation between LIFEWAY FOODS and WUXI BIOLOGICS

Assuming the 90 days trading horizon LIFEWAY FOODS is expected to generate 3.34 times less return on investment than WUXI BIOLOGICS. But when comparing it to its historical volatility, LIFEWAY FOODS is 1.78 times less risky than WUXI BIOLOGICS. It trades about 0.07 of its potential returns per unit of risk. WUXI BIOLOGICS UNSPADR2 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  280.00  in WUXI BIOLOGICS UNSPADR2 on September 23, 2024 and sell it today you would earn a total of  138.00  from holding WUXI BIOLOGICS UNSPADR2 or generate 49.29% return on investment over 90 days.

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

LIFEWAY FOODS  vs.  WUXI BIOLOGICS UNSPADR2

LIFEWAY FOODS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LIFEWAY FOODS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LIFEWAY FOODS unveiled solid returns over the last few months and may actually be approaching a breakup point.

WUXI BIOLOGICS UNSPADR2

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WUXI BIOLOGICS UNSPADR2 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WUXI BIOLOGICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LIFEWAY FOODS and WUXI BIOLOGICS

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

The idea behind LIFEWAY FOODS and WUXI BIOLOGICS UNSPADR2 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.