Correlation Between Lifeway Foods and Ambev SA

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Can any of the company-specific risk be diversified away by investing in both Lifeway Foods and Ambev SA 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 Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifeway Foods and Ambev SA ADR, you can compare the effects of market volatilities on Lifeway Foods and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifeway Foods and Ambev SA.

Diversification Opportunities for Lifeway Foods and Ambev SA

  Correlation Coefficient

Very good diversification

The 3 months correlation between Lifeway and Ambev is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lifeway Foods and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Lifeway Foods i.e., Lifeway Foods and Ambev SA go up and down completely randomly.

Pair Corralation between Lifeway Foods and Ambev SA

Given the investment horizon of 90 days Lifeway Foods is expected to under-perform the Ambev SA. In addition to that, Lifeway Foods is 1.21 times more volatile than Ambev SA ADR. It trades about -0.04 of its total potential returns per unit of risk. Ambev SA ADR is currently generating about 0.0 per unit of volatility. If you would invest  286.00  in Ambev SA ADR on March 3, 2023 and sell it today you would lose (4.00)  from holding Ambev SA ADR or give up 1.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Lifeway Foods  vs.  Ambev SA ADR

 Performance (%) 
Lifeway Foods 

Lifeway Performance

0 of 100

Over the last 90 days Lifeway Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lifeway Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Ambev SA ADR 

Ambev Performance

9 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Ambev SA may actually be approaching a critical reversion point that can send shares even higher in July 2023.

Lifeway Foods and Ambev SA Volatility Contrast

   Predicted Return Density   

Pair Trading with Lifeway Foods and Ambev SA

The main advantage of trading using opposite Lifeway Foods and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifeway Foods position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.
The idea behind Lifeway Foods and Ambev SA ADR 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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