Correlation Between Lem Holding and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lem Holding and Dow Jones 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 Lem Holding and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lem Holding SA and Dow Jones Industrial, you can compare the effects of market volatilities on Lem Holding and Dow Jones 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 Lem Holding with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lem Holding and Dow Jones.
Diversification Opportunities for Lem Holding and Dow Jones
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lem and Dow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lem Holding SA and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Lem Holding 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 Lem Holding SA are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lem Holding i.e., Lem Holding and Dow Jones go up and down completely randomly.
Pair Corralation between Lem Holding and Dow Jones
Assuming the 90 days trading horizon Lem Holding SA is expected to generate 3.42 times more return on investment than Dow Jones. However, Lem Holding is 3.42 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.22 per unit of risk. If you would invest 84,600 in Lem Holding SA on November 27, 2024 and sell it today you would earn a total of 5,400 from holding Lem Holding SA or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lem Holding SA vs. Dow Jones Industrial
Performance |
| Timeline |
Lem Holding and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lem Holding SA
Pair trading matchups for Lem Holding
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lem Holding and Dow Jones
The main advantage of trading using opposite Lem Holding and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lem Holding position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lem Holding vs. Inficon Holding | Lem Holding vs. Belimo Holding | Lem Holding vs. Interroll Holding AG | Lem Holding vs. Comet Holding AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |