Correlation Between Continental Aktiengesellscha and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Continental Aktiengesellscha and Luminar Technologies 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 Continental Aktiengesellscha and Luminar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Aktiengesellschaft and Luminar Technologies, you can compare the effects of market volatilities on Continental Aktiengesellscha and Luminar Technologies 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 Continental Aktiengesellscha with a short position of Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Aktiengesellscha and Luminar Technologies.
Diversification Opportunities for Continental Aktiengesellscha and Luminar Technologies
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Continental and Luminar is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Continental Aktiengesellschaft and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies and Continental Aktiengesellscha 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 Continental Aktiengesellschaft are associated (or correlated) with Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Continental Aktiengesellscha i.e., Continental Aktiengesellscha and Luminar Technologies go up and down completely randomly.
Pair Corralation between Continental Aktiengesellscha and Luminar Technologies
Assuming the 90 days horizon Continental Aktiengesellscha is expected to generate 8.84 times less return on investment than Luminar Technologies. But when comparing it to its historical volatility, Continental Aktiengesellschaft is 4.33 times less risky than Luminar Technologies. It trades about 0.09 of its potential returns per unit of risk. Luminar Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 504.00 in Luminar Technologies on October 24, 2024 and sell it today you would earn a total of 168.00 from holding Luminar Technologies or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Aktiengesellschaft vs. Luminar Technologies
Performance |
| Timeline |
| Continental Aktiengesellscha |
| Luminar Technologies |
Continental Aktiengesellscha and Luminar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Aktiengesellscha and Luminar Technologies
The main advantage of trading using opposite Continental Aktiengesellscha and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Aktiengesellscha position performs unexpectedly, Luminar Technologies 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.The idea behind Continental Aktiengesellschaft and Luminar Technologies 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.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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