Correlation Between CAUDAN DEVELOPMENT and LUX ISLAND
Can any of the company-specific risk be diversified away by investing in both CAUDAN DEVELOPMENT 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 CAUDAN DEVELOPMENT and LUX ISLAND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAUDAN DEVELOPMENT LTD and LUX ISLAND RESORTS, you can compare the effects of market volatilities on CAUDAN DEVELOPMENT 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 CAUDAN DEVELOPMENT with a short position of LUX ISLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAUDAN DEVELOPMENT and LUX ISLAND.
Diversification Opportunities for CAUDAN DEVELOPMENT and LUX ISLAND
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CAUDAN and LUX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CAUDAN DEVELOPMENT LTD 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 CAUDAN DEVELOPMENT 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 CAUDAN DEVELOPMENT LTD 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 CAUDAN DEVELOPMENT i.e., CAUDAN DEVELOPMENT and LUX ISLAND go up and down completely randomly.
Pair Corralation between CAUDAN DEVELOPMENT and LUX ISLAND
Assuming the 90 days trading horizon CAUDAN DEVELOPMENT is expected to generate 1.44 times less return on investment than LUX ISLAND. In addition to that, CAUDAN DEVELOPMENT is 2.96 times more volatile than LUX ISLAND RESORTS. It trades about 0.01 of its total potential returns per unit of risk. LUX ISLAND RESORTS is currently generating about 0.03 per unit of volatility. If you would invest 4,774 in LUX ISLAND RESORTS on September 2, 2024 and sell it today you would earn a total of 726.00 from holding LUX ISLAND RESORTS or generate 15.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.66% |
| Values | Daily Returns |
CAUDAN DEVELOPMENT LTD vs. LUX ISLAND RESORTS
Performance |
| Timeline |
| CAUDAN DEVELOPMENT LTD |
| LUX ISLAND RESORTS |
CAUDAN DEVELOPMENT and LUX ISLAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAUDAN DEVELOPMENT and LUX ISLAND
The main advantage of trading using opposite CAUDAN DEVELOPMENT and LUX ISLAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAUDAN DEVELOPMENT 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.| CAUDAN DEVELOPMENT vs. FINCORP INVESTMENT LTD | CAUDAN DEVELOPMENT vs. MCB GROUP LTD | CAUDAN DEVELOPMENT vs. LUX ISLAND RESORTS | CAUDAN DEVELOPMENT vs. NEW MAURITIUS HOTELS |
| LUX ISLAND vs. FINCORP INVESTMENT LTD | LUX ISLAND vs. MCB GROUP LTD | LUX ISLAND vs. CAUDAN DEVELOPMENT LTD | LUX ISLAND vs. NEW MAURITIUS HOTELS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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