Correlation Between Grande Asset and LPN Development
Can any of the company-specific risk be diversified away by investing in both Grande Asset and LPN Development 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 Grande Asset and LPN Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grande Asset Hotels and LPN Development Public, you can compare the effects of market volatilities on Grande Asset and LPN Development 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 Grande Asset with a short position of LPN Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Asset and LPN Development.
Diversification Opportunities for Grande Asset and LPN Development
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grande and LPN is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Grande Asset Hotels and LPN Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPN Development Public and Grande Asset 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 Grande Asset Hotels are associated (or correlated) with LPN Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPN Development Public has no effect on the direction of Grande Asset i.e., Grande Asset and LPN Development go up and down completely randomly.
Pair Corralation between Grande Asset and LPN Development
Assuming the 90 days trading horizon Grande Asset Hotels is expected to generate 8.18 times more return on investment than LPN Development. However, Grande Asset is 8.18 times more volatile than LPN Development Public. It trades about -0.01 of its potential returns per unit of risk. LPN Development Public is currently generating about -0.37 per unit of risk. If you would invest 6.00 in Grande Asset Hotels on November 3, 2024 and sell it today you would lose (1.00) from holding Grande Asset Hotels or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grande Asset Hotels vs. LPN Development Public
Performance |
| Timeline |
| Grande Asset Hotels |
| LPN Development Public |
Grande Asset and LPN Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grande Asset and LPN Development
The main advantage of trading using opposite Grande Asset and LPN Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Asset position performs unexpectedly, LPN Development 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 LPN Development will offset losses from the drop in LPN Development's long position.| Grande Asset vs. Indara Insurance Public | Grande Asset vs. The Navakij Insurance | Grande Asset vs. NSL Foods Public | Grande Asset vs. Information and Communication |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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