Correlation Between LAMDA Development and Avax SA
Can any of the company-specific risk be diversified away by investing in both LAMDA Development and Avax SA 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 LAMDA Development and Avax SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAMDA Development SA and Avax SA, you can compare the effects of market volatilities on LAMDA Development and Avax SA 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 LAMDA Development with a short position of Avax SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAMDA Development and Avax SA.
Diversification Opportunities for LAMDA Development and Avax SA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LAMDA and Avax is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LAMDA Development SA and Avax SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax SA and LAMDA Development 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 LAMDA Development SA are associated (or correlated) with Avax SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax SA has no effect on the direction of LAMDA Development i.e., LAMDA Development and Avax SA go up and down completely randomly.
Pair Corralation between LAMDA Development and Avax SA
Assuming the 90 days trading horizon LAMDA Development is expected to generate 3.03 times less return on investment than Avax SA. But when comparing it to its historical volatility, LAMDA Development SA is 1.58 times less risky than Avax SA. It trades about 0.04 of its potential returns per unit of risk. Avax SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Avax SA on August 29, 2024 and sell it today you would earn a total of 80.00 from holding Avax SA or generate 117.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAMDA Development SA vs. Avax SA
Performance |
| Timeline |
| LAMDA Development |
| Avax SA |
LAMDA Development and Avax SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAMDA Development and Avax SA
The main advantage of trading using opposite LAMDA Development and Avax SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAMDA Development position performs unexpectedly, Avax SA 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 Avax SA will offset losses from the drop in Avax SA's long position.| LAMDA Development vs. National Bank of | LAMDA Development vs. EL D Mouzakis | LAMDA Development vs. Lampsa Hellenic Hotels | LAMDA Development vs. N Leventeris SA |
| Avax SA vs. Ellaktor SA | Avax SA vs. GEK TERNA Holdings | Avax SA vs. LAMDA Development SA | Avax SA vs. Public Power |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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