Correlation Between Lumibird and Predilife
Can any of the company-specific risk be diversified away by investing in both Lumibird and Predilife 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 Lumibird and Predilife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumibird SA and Predilife, you can compare the effects of market volatilities on Lumibird and Predilife 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 Lumibird with a short position of Predilife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumibird and Predilife.
Diversification Opportunities for Lumibird and Predilife
Very poor diversification
The 3 months correlation between Lumibird and Predilife is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lumibird SA and Predilife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predilife and Lumibird 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 Lumibird SA are associated (or correlated) with Predilife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predilife has no effect on the direction of Lumibird i.e., Lumibird and Predilife go up and down completely randomly.
Pair Corralation between Lumibird and Predilife
Assuming the 90 days trading horizon Lumibird SA is expected to generate 2.35 times more return on investment than Predilife. However, Lumibird is 2.35 times more volatile than Predilife. It trades about 0.21 of its potential returns per unit of risk. Predilife is currently generating about 0.29 per unit of risk. If you would invest 720.00 in Lumibird SA on August 29, 2024 and sell it today you would earn a total of 214.00 from holding Lumibird SA or generate 29.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lumibird SA vs. Predilife
Performance |
| Timeline |
| Lumibird SA |
| Predilife |
Lumibird and Predilife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumibird and Predilife
The main advantage of trading using opposite Lumibird and Predilife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumibird position performs unexpectedly, Predilife 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 Predilife will offset losses from the drop in Predilife's long position.| Lumibird vs. Aubay Socit Anonyme | Lumibird vs. Infotel SA | Lumibird vs. IT Link | Lumibird vs. Manitou BF SA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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