Correlation Between LGL and AT S
Can any of the company-specific risk be diversified away by investing in both LGL and AT S 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 LGL and AT S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGL Group and AT S Austria, you can compare the effects of market volatilities on LGL and AT S 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 LGL with a short position of AT S. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGL and AT S.
Diversification Opportunities for LGL and AT S
Modest diversification
The 3 months correlation between LGL and ASAAF is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding LGL Group and AT S Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AT S Austria and LGL 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 LGL Group are associated (or correlated) with AT S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AT S Austria has no effect on the direction of LGL i.e., LGL and AT S go up and down completely randomly.
Pair Corralation between LGL and AT S
If you would invest 598.00 in LGL Group on August 28, 2024 and sell it today you would earn a total of 2.00 from holding LGL Group or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGL Group vs. AT S Austria
Performance |
| Timeline |
| LGL Group |
| AT S Austria |
LGL and AT S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGL and AT S
The main advantage of trading using opposite LGL and AT S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGL position performs unexpectedly, AT S 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 AT S will offset losses from the drop in AT S's long position.The idea behind LGL Group and AT S Austria pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |