Correlation Between CA Modas and Lam Research
Can any of the company-specific risk be diversified away by investing in both CA Modas and Lam Research 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 CA Modas and Lam Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CA Modas SA and Lam Research, you can compare the effects of market volatilities on CA Modas and Lam Research 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 CA Modas with a short position of Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of CA Modas and Lam Research.
Diversification Opportunities for CA Modas and Lam Research
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CEAB3 and Lam is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CA Modas SA and Lam Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research and CA Modas 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 CA Modas SA are associated (or correlated) with Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research has no effect on the direction of CA Modas i.e., CA Modas and Lam Research go up and down completely randomly.
Pair Corralation between CA Modas and Lam Research
Assuming the 90 days trading horizon CA Modas SA is expected to under-perform the Lam Research. In addition to that, CA Modas is 1.23 times more volatile than Lam Research. It trades about -0.03 of its total potential returns per unit of risk. Lam Research is currently generating about 0.09 per unit of volatility. If you would invest 1,011 in Lam Research on November 28, 2024 and sell it today you would earn a total of 50.00 from holding Lam Research or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CA Modas SA vs. Lam Research
Performance |
| Timeline |
| CA Modas SA |
| Lam Research |
CA Modas and Lam Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CA Modas and Lam Research
The main advantage of trading using opposite CA Modas and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CA Modas position performs unexpectedly, Lam Research 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 Lam Research will offset losses from the drop in Lam Research's long position.| CA Modas vs. Marisa Lojas SA | CA Modas vs. Vivara Participaes SA | CA Modas vs. Guararapes Confeces SA | CA Modas vs. Atacado SA |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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