Correlation Between Diamyd Medical and LGI Homes
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and LGI Homes 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 Diamyd Medical and LGI Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and LGI Homes, you can compare the effects of market volatilities on Diamyd Medical and LGI Homes 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 Diamyd Medical with a short position of LGI Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and LGI Homes.
Diversification Opportunities for Diamyd Medical and LGI Homes
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Diamyd and LGI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and LGI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGI Homes and Diamyd Medical 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 Diamyd Medical AB are associated (or correlated) with LGI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGI Homes has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and LGI Homes go up and down completely randomly.
Pair Corralation between Diamyd Medical and LGI Homes
Assuming the 90 days horizon Diamyd Medical AB is expected to generate 1.52 times more return on investment than LGI Homes. However, Diamyd Medical is 1.52 times more volatile than LGI Homes. It trades about 0.05 of its potential returns per unit of risk. LGI Homes is currently generating about 0.05 per unit of risk. If you would invest 125.00 in Diamyd Medical AB on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Diamyd Medical AB or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Diamyd Medical AB vs. LGI Homes
Performance |
| Timeline |
| Diamyd Medical AB |
| LGI Homes |
Diamyd Medical and LGI Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and LGI Homes
The main advantage of trading using opposite Diamyd Medical and LGI Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, LGI Homes 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 LGI Homes will offset losses from the drop in LGI Homes' long position.| Diamyd Medical vs. Moderna | Diamyd Medical vs. BioNTech SE | Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. SIVERS SEMICONDUCTORS AB |
| LGI Homes vs. UNIVERSAL MUSIC GROUP | LGI Homes vs. VITEC SOFTWARE GROUP | LGI Homes vs. Zoom Video Communications | LGI Homes vs. MAGIC SOFTWARE ENTR |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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