Correlation Between Lanakam SA and Biokarpet
Can any of the company-specific risk be diversified away by investing in both Lanakam SA and Biokarpet 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 Lanakam SA and Biokarpet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lanakam SA and Biokarpet SA, you can compare the effects of market volatilities on Lanakam SA and Biokarpet 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 Lanakam SA with a short position of Biokarpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanakam SA and Biokarpet.
Diversification Opportunities for Lanakam SA and Biokarpet
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lanakam and Biokarpet is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lanakam SA and Biokarpet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biokarpet SA and Lanakam SA 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 Lanakam SA are associated (or correlated) with Biokarpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biokarpet SA has no effect on the direction of Lanakam SA i.e., Lanakam SA and Biokarpet go up and down completely randomly.
Pair Corralation between Lanakam SA and Biokarpet
Assuming the 90 days trading horizon Lanakam SA is expected to generate 0.99 times more return on investment than Biokarpet. However, Lanakam SA is 1.01 times less risky than Biokarpet. It trades about 0.01 of its potential returns per unit of risk. Biokarpet SA is currently generating about -0.08 per unit of risk. If you would invest 99.00 in Lanakam SA on November 1, 2024 and sell it today you would earn a total of 1.00 from holding Lanakam SA or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Lanakam SA vs. Biokarpet SA
Performance |
| Timeline |
| Lanakam SA |
| Biokarpet SA |
Lanakam SA and Biokarpet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lanakam SA and Biokarpet
The main advantage of trading using opposite Lanakam SA and Biokarpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lanakam SA position performs unexpectedly, Biokarpet 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 Biokarpet will offset losses from the drop in Biokarpet's long position.| Lanakam SA vs. CPI Computer Peripherals | Lanakam SA vs. Elton International Trading | Lanakam SA vs. Optronics Technologies SA | Lanakam SA vs. General Commercial Industrial |
| Biokarpet vs. EL D Mouzakis | Biokarpet vs. Nafpaktos Textile Industry | Biokarpet vs. Lanakam SA | Biokarpet vs. J B Ladenis |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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