Correlation Between AFRICA CLEAN and LUX ISLAND
Can any of the company-specific risk be diversified away by investing in both AFRICA CLEAN and LUX ISLAND 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 AFRICA CLEAN and LUX ISLAND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFRICA CLEAN ENERGY and LUX ISLAND RESORTS, you can compare the effects of market volatilities on AFRICA CLEAN and LUX ISLAND 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 AFRICA CLEAN with a short position of LUX ISLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFRICA CLEAN and LUX ISLAND.
Diversification Opportunities for AFRICA CLEAN and LUX ISLAND
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AFRICA and LUX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AFRICA CLEAN ENERGY and LUX ISLAND RESORTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUX ISLAND RESORTS and AFRICA CLEAN 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 AFRICA CLEAN ENERGY are associated (or correlated) with LUX ISLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUX ISLAND RESORTS has no effect on the direction of AFRICA CLEAN i.e., AFRICA CLEAN and LUX ISLAND go up and down completely randomly.
Pair Corralation between AFRICA CLEAN and LUX ISLAND
Assuming the 90 days trading horizon AFRICA CLEAN ENERGY is expected to under-perform the LUX ISLAND. But the stock apears to be less risky and, when comparing its historical volatility, AFRICA CLEAN ENERGY is 1.22 times less risky than LUX ISLAND. The stock trades about -0.05 of its potential returns per unit of risk. The LUX ISLAND RESORTS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,591 in LUX ISLAND RESORTS on November 4, 2024 and sell it today you would earn a total of 909.00 from holding LUX ISLAND RESORTS or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 90.13% |
| Values | Daily Returns |
AFRICA CLEAN ENERGY vs. LUX ISLAND RESORTS
Performance |
| Timeline |
| AFRICA CLEAN ENERGY |
| LUX ISLAND RESORTS |
AFRICA CLEAN and LUX ISLAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFRICA CLEAN and LUX ISLAND
The main advantage of trading using opposite AFRICA CLEAN and LUX ISLAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFRICA CLEAN position performs unexpectedly, LUX ISLAND 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 LUX ISLAND will offset losses from the drop in LUX ISLAND's long position.| AFRICA CLEAN vs. FINCORP INVESTMENT LTD | AFRICA CLEAN vs. MCB GROUP LIMITED | AFRICA CLEAN vs. MCB GROUP LTD | AFRICA CLEAN vs. LOTTOTECH LTD |
| LUX ISLAND vs. FINCORP INVESTMENT LTD | LUX ISLAND vs. MCB GROUP LIMITED | LUX ISLAND vs. MCB GROUP LTD | LUX ISLAND vs. LOTTOTECH LTD |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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