Correlation Between Light Wonder and Boss Energy
Can any of the company-specific risk be diversified away by investing in both Light Wonder and Boss Energy 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 Light Wonder and Boss Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Boss Energy Limited, you can compare the effects of market volatilities on Light Wonder and Boss Energy 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 Light Wonder with a short position of Boss Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Boss Energy.
Diversification Opportunities for Light Wonder and Boss Energy
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Light and Boss is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Boss Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Energy Limited and Light Wonder 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 Light Wonder are associated (or correlated) with Boss Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Energy Limited has no effect on the direction of Light Wonder i.e., Light Wonder and Boss Energy go up and down completely randomly.
Pair Corralation between Light Wonder and Boss Energy
Assuming the 90 days trading horizon Light Wonder is expected to generate 0.74 times more return on investment than Boss Energy. However, Light Wonder is 1.36 times less risky than Boss Energy. It trades about 0.02 of its potential returns per unit of risk. Boss Energy Limited is currently generating about -0.31 per unit of risk. If you would invest 14,705 in Light Wonder on August 31, 2024 and sell it today you would earn a total of 108.00 from holding Light Wonder or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light Wonder vs. Boss Energy Limited
Performance |
| Timeline |
| Light Wonder |
| Boss Energy Limited |
Light Wonder and Boss Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and Boss Energy
The main advantage of trading using opposite Light Wonder and Boss Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Boss Energy 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 Boss Energy will offset losses from the drop in Boss Energy's long position.| Light Wonder vs. Hawsons Iron | Light Wonder vs. Spirit Telecom | Light Wonder vs. TPG Telecom | Light Wonder vs. The Environmental Group |
| Boss Energy vs. Queste Communications | Boss Energy vs. Pinnacle Investment Management | Boss Energy vs. Spirit Telecom | Boss Energy vs. Hotel Property Investments |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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