Correlation Between Biokarpet and Lanakam SA
Can any of the company-specific risk be diversified away by investing in both Biokarpet and Lanakam 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 Biokarpet and Lanakam SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biokarpet SA and Lanakam SA, you can compare the effects of market volatilities on Biokarpet and Lanakam 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 Biokarpet with a short position of Lanakam SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biokarpet and Lanakam SA.
Diversification Opportunities for Biokarpet and Lanakam SA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biokarpet and Lanakam is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Biokarpet SA and Lanakam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanakam SA and Biokarpet 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 Biokarpet SA are associated (or correlated) with Lanakam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanakam SA has no effect on the direction of Biokarpet i.e., Biokarpet and Lanakam SA go up and down completely randomly.
Pair Corralation between Biokarpet and Lanakam SA
Assuming the 90 days trading horizon Biokarpet is expected to generate 1.32 times less return on investment than Lanakam SA. But when comparing it to its historical volatility, Biokarpet SA is 1.14 times less risky than Lanakam SA. It trades about 0.02 of its potential returns per unit of risk. Lanakam SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 89.00 in Lanakam SA on November 1, 2024 and sell it today you would earn a total of 11.00 from holding Lanakam SA or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biokarpet SA vs. Lanakam SA
Performance |
| Timeline |
| Biokarpet SA |
| Lanakam SA |
Biokarpet and Lanakam SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biokarpet and Lanakam SA
The main advantage of trading using opposite Biokarpet and Lanakam SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biokarpet position performs unexpectedly, Lanakam 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 Lanakam SA will offset losses from the drop in Lanakam SA's long position.| Biokarpet vs. EL D Mouzakis | Biokarpet vs. Nafpaktos Textile Industry | Biokarpet vs. Lanakam SA | Biokarpet vs. J B Ladenis |
| Lanakam SA vs. CPI Computer Peripherals | Lanakam SA vs. Elton International Trading | Lanakam SA vs. Optronics Technologies SA | Lanakam SA vs. General Commercial Industrial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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