Correlation Between Lumine and Topicus
Can any of the company-specific risk be diversified away by investing in both Lumine and Topicus 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 Lumine and Topicus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumine Group and Topicus, you can compare the effects of market volatilities on Lumine and Topicus 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 Lumine with a short position of Topicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumine and Topicus.
Diversification Opportunities for Lumine and Topicus
Excellent diversification
The 3 months correlation between Lumine and Topicus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lumine Group and Topicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topicus and Lumine 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 Lumine Group are associated (or correlated) with Topicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topicus has no effect on the direction of Lumine i.e., Lumine and Topicus go up and down completely randomly.
Pair Corralation between Lumine and Topicus
Assuming the 90 days horizon Lumine Group is expected to generate 1.43 times more return on investment than Topicus. However, Lumine is 1.43 times more volatile than Topicus. It trades about 0.09 of its potential returns per unit of risk. Topicus is currently generating about 0.07 per unit of risk. If you would invest 1,675 in Lumine Group on October 9, 2024 and sell it today you would earn a total of 2,341 from holding Lumine Group or generate 139.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.69% |
| Values | Daily Returns |
Lumine Group vs. Topicus
Performance |
| Timeline |
| Lumine Group |
| Topicus |
Lumine and Topicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumine and Topicus
The main advantage of trading using opposite Lumine and Topicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumine position performs unexpectedly, Topicus 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 Topicus will offset losses from the drop in Topicus' long position.| Lumine vs. Topicus | Lumine vs. Constellation Software | Lumine vs. Brookfield | Lumine vs. Brookfield Asset Management |
| Topicus vs. Constellation Software | Topicus vs. Converge Technology Solutions | Topicus vs. Enghouse Systems | Topicus vs. Dye Durham |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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