Correlation Between Libra Insurance and Buff Technologies
Can any of the company-specific risk be diversified away by investing in both Libra Insurance and Buff Technologies 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 Libra Insurance and Buff Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Libra Insurance and Buff Technologies, you can compare the effects of market volatilities on Libra Insurance and Buff Technologies 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 Libra Insurance with a short position of Buff Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Libra Insurance and Buff Technologies.
Diversification Opportunities for Libra Insurance and Buff Technologies
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Libra and Buff is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Libra Insurance and Buff Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buff Technologies and Libra Insurance 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 Libra Insurance are associated (or correlated) with Buff Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buff Technologies has no effect on the direction of Libra Insurance i.e., Libra Insurance and Buff Technologies go up and down completely randomly.
Pair Corralation between Libra Insurance and Buff Technologies
Assuming the 90 days trading horizon Libra Insurance is expected to generate 0.3 times more return on investment than Buff Technologies. However, Libra Insurance is 3.29 times less risky than Buff Technologies. It trades about 0.33 of its potential returns per unit of risk. Buff Technologies is currently generating about 0.04 per unit of risk. If you would invest 45,842 in Libra Insurance on November 3, 2024 and sell it today you would earn a total of 56,558 from holding Libra Insurance or generate 123.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Libra Insurance vs. Buff Technologies
Performance |
| Timeline |
| Libra Insurance |
| Buff Technologies |
Libra Insurance and Buff Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Libra Insurance and Buff Technologies
The main advantage of trading using opposite Libra Insurance and Buff Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Libra Insurance position performs unexpectedly, Buff Technologies 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 Buff Technologies will offset losses from the drop in Buff Technologies' long position.| Libra Insurance vs. Purple Biotech | Libra Insurance vs. Brainsway | Libra Insurance vs. Mivne Real Estate | Libra Insurance vs. Photomyne |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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