Correlation Between LPP SA and APS Energia
Can any of the company-specific risk be diversified away by investing in both LPP SA and APS Energia 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 LPP SA and APS Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPP SA and APS Energia SA, you can compare the effects of market volatilities on LPP SA and APS Energia 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 LPP SA with a short position of APS Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPP SA and APS Energia.
Diversification Opportunities for LPP SA and APS Energia
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LPP and APS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LPP SA and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia SA and LPP SA 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 LPP SA are associated (or correlated) with APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of LPP SA i.e., LPP SA and APS Energia go up and down completely randomly.
Pair Corralation between LPP SA and APS Energia
Assuming the 90 days trading horizon LPP SA is expected to generate 1.82 times less return on investment than APS Energia. But when comparing it to its historical volatility, LPP SA is 1.61 times less risky than APS Energia. It trades about 0.17 of its potential returns per unit of risk. APS Energia SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 231.00 in APS Energia SA on September 1, 2024 and sell it today you would earn a total of 35.00 from holding APS Energia SA or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
LPP SA vs. APS Energia SA
Performance |
| Timeline |
| LPP SA |
| APS Energia SA |
LPP SA and APS Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPP SA and APS Energia
The main advantage of trading using opposite LPP SA and APS Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPP SA position performs unexpectedly, APS Energia 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 APS Energia will offset losses from the drop in APS Energia's long position.| LPP SA vs. Santander Bank Polska | LPP SA vs. Saule Technologies SA | LPP SA vs. LSI Software SA | LPP SA vs. PMPG Polskie Media |
| APS Energia vs. LSI Software SA | APS Energia vs. Cloud Technologies SA | APS Energia vs. Quantum Software SA | APS Energia vs. Mlk Foods Public |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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