Correlation Between Lumia and Nabtesco Corp
Can any of the company-specific risk be diversified away by investing in both Lumia and Nabtesco Corp 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 Lumia and Nabtesco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Nabtesco Corp, you can compare the effects of market volatilities on Lumia and Nabtesco Corp 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 Lumia with a short position of Nabtesco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Nabtesco Corp.
Diversification Opportunities for Lumia and Nabtesco Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumia and Nabtesco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Nabtesco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabtesco Corp and Lumia 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 Lumia are associated (or correlated) with Nabtesco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabtesco Corp has no effect on the direction of Lumia i.e., Lumia and Nabtesco Corp go up and down completely randomly.
Pair Corralation between Lumia and Nabtesco Corp
Assuming the 90 days trading horizon Lumia is expected to generate 20.84 times more return on investment than Nabtesco Corp. However, Lumia is 20.84 times more volatile than Nabtesco Corp. It trades about 0.04 of its potential returns per unit of risk. Nabtesco Corp is currently generating about -0.03 per unit of risk. If you would invest 0.00 in Lumia on October 12, 2024 and sell it today you would earn a total of 117.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Lumia vs. Nabtesco Corp
Performance |
| Timeline |
| Lumia |
| Nabtesco Corp |
Lumia and Nabtesco Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Nabtesco Corp
The main advantage of trading using opposite Lumia and Nabtesco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Nabtesco Corp 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 Nabtesco Corp will offset losses from the drop in Nabtesco Corp's long position.The idea behind Lumia and Nabtesco Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nabtesco Corp vs. Apple Inc | Nabtesco Corp vs. Apple Inc | Nabtesco Corp vs. Apple Inc | Nabtesco Corp vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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