Correlation Between Lighthouse Capital and Aveng
Can any of the company-specific risk be diversified away by investing in both Lighthouse Capital and Aveng 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 Lighthouse Capital and Aveng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lighthouse Capital and Aveng, you can compare the effects of market volatilities on Lighthouse Capital and Aveng 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 Lighthouse Capital with a short position of Aveng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lighthouse Capital and Aveng.
Diversification Opportunities for Lighthouse Capital and Aveng
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lighthouse and Aveng is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lighthouse Capital and Aveng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveng and Lighthouse Capital 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 Lighthouse Capital are associated (or correlated) with Aveng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveng has no effect on the direction of Lighthouse Capital i.e., Lighthouse Capital and Aveng go up and down completely randomly.
Pair Corralation between Lighthouse Capital and Aveng
Assuming the 90 days trading horizon Lighthouse Capital is expected to generate 0.45 times more return on investment than Aveng. However, Lighthouse Capital is 2.21 times less risky than Aveng. It trades about 0.03 of its potential returns per unit of risk. Aveng is currently generating about -0.01 per unit of risk. If you would invest 65,492 in Lighthouse Capital on September 3, 2024 and sell it today you would earn a total of 11,608 from holding Lighthouse Capital or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lighthouse Capital vs. Aveng
Performance |
| Timeline |
| Lighthouse Capital |
| Aveng |
Lighthouse Capital and Aveng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lighthouse Capital and Aveng
The main advantage of trading using opposite Lighthouse Capital and Aveng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lighthouse Capital position performs unexpectedly, Aveng 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 Aveng will offset losses from the drop in Aveng's long position.| Lighthouse Capital vs. Lesaka Technologies | Lighthouse Capital vs. Safari Investments RSA | Lighthouse Capital vs. We Buy Cars | Lighthouse Capital vs. Harmony Gold Mining |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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