Correlation Between LPP SA and New Tech
Can any of the company-specific risk be diversified away by investing in both LPP SA and New Tech 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 New Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPP SA and New Tech Capital, you can compare the effects of market volatilities on LPP SA and New Tech 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 New Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPP SA and New Tech.
Diversification Opportunities for LPP SA and New Tech
Very good diversification
The 3 months correlation between LPP and New is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LPP SA and New Tech Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Tech Capital 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 New Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Tech Capital has no effect on the direction of LPP SA i.e., LPP SA and New Tech go up and down completely randomly.
Pair Corralation between LPP SA and New Tech
Assuming the 90 days trading horizon LPP SA is expected to generate 1.14 times more return on investment than New Tech. However, LPP SA is 1.14 times more volatile than New Tech Capital. It trades about 0.0 of its potential returns per unit of risk. New Tech Capital is currently generating about -0.3 per unit of risk. If you would invest 1,559,000 in LPP SA on August 29, 2024 and sell it today you would lose (9,000) from holding LPP SA or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPP SA vs. New Tech Capital
Performance |
| Timeline |
| LPP SA |
| New Tech Capital |
LPP SA and New Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPP SA and New Tech
The main advantage of trading using opposite LPP SA and New Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPP SA position performs unexpectedly, New Tech 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 New Tech will offset losses from the drop in New Tech's long position.| LPP SA vs. Monnari Trade SA | LPP SA vs. Esotiq Henderson SA | LPP SA vs. Asseco Business Solutions | LPP SA vs. Detalion Games SA |
| New Tech vs. Movie Games SA | New Tech vs. Marie Brizard Wine | New Tech vs. Igoria Trade SA | New Tech 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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