Correlation Between SIERRA METALS and LUMI GRUPPEN
Can any of the company-specific risk be diversified away by investing in both SIERRA METALS and LUMI GRUPPEN 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 SIERRA METALS and LUMI GRUPPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIERRA METALS and LUMI GRUPPEN AS, you can compare the effects of market volatilities on SIERRA METALS and LUMI GRUPPEN 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 SIERRA METALS with a short position of LUMI GRUPPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIERRA METALS and LUMI GRUPPEN.
Diversification Opportunities for SIERRA METALS and LUMI GRUPPEN
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIERRA and LUMI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SIERRA METALS and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS and SIERRA METALS 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 SIERRA METALS are associated (or correlated) with LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of SIERRA METALS i.e., SIERRA METALS and LUMI GRUPPEN go up and down completely randomly.
Pair Corralation between SIERRA METALS and LUMI GRUPPEN
Assuming the 90 days trading horizon SIERRA METALS is expected to generate 0.42 times more return on investment than LUMI GRUPPEN. However, SIERRA METALS is 2.37 times less risky than LUMI GRUPPEN. It trades about 0.38 of its potential returns per unit of risk. LUMI GRUPPEN AS is currently generating about 0.14 per unit of risk. If you would invest 46.00 in SIERRA METALS on September 24, 2024 and sell it today you would earn a total of 10.00 from holding SIERRA METALS or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIERRA METALS vs. LUMI GRUPPEN AS
Performance |
| Timeline |
| SIERRA METALS |
| LUMI GRUPPEN AS |
SIERRA METALS and LUMI GRUPPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIERRA METALS and LUMI GRUPPEN
The main advantage of trading using opposite SIERRA METALS and LUMI GRUPPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIERRA METALS position performs unexpectedly, LUMI GRUPPEN 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 LUMI GRUPPEN will offset losses from the drop in LUMI GRUPPEN's long position.| SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Apple Inc | SIERRA METALS vs. Microsoft |
| LUMI GRUPPEN vs. LG Display Co | LUMI GRUPPEN vs. CHEMICAL INDUSTRIES | LUMI GRUPPEN vs. NISSAN CHEMICAL IND | LUMI GRUPPEN vs. Nissan Chemical Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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