Correlation Between LPP SA and Vercom SA
Can any of the company-specific risk be diversified away by investing in both LPP SA and Vercom SA 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 Vercom SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPP SA and Vercom SA, you can compare the effects of market volatilities on LPP SA and Vercom SA 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 Vercom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPP SA and Vercom SA.
Diversification Opportunities for LPP SA and Vercom SA
Very weak diversification
The 3 months correlation between LPP and Vercom is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding LPP SA and Vercom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vercom 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 Vercom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vercom SA has no effect on the direction of LPP SA i.e., LPP SA and Vercom SA go up and down completely randomly.
Pair Corralation between LPP SA and Vercom SA
Assuming the 90 days trading horizon LPP SA is expected to generate 0.85 times more return on investment than Vercom SA. However, LPP SA is 1.18 times less risky than Vercom SA. It trades about -0.02 of its potential returns per unit of risk. Vercom SA is currently generating about -0.04 per unit of risk. If you would invest 1,692,501 in LPP SA on September 1, 2024 and sell it today you would lose (126,501) from holding LPP SA or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
LPP SA vs. Vercom SA
Performance |
| Timeline |
| LPP SA |
| Vercom SA |
LPP SA and Vercom SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPP SA and Vercom SA
The main advantage of trading using opposite LPP SA and Vercom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPP SA position performs unexpectedly, Vercom SA 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 Vercom SA will offset losses from the drop in Vercom SA'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 |
| Vercom SA vs. Banco Santander SA | Vercom SA vs. UniCredit SpA | Vercom SA vs. CEZ as | Vercom SA vs. Polski Koncern Naftowy |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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