Correlation Between Lumia and Gold Rain
Can any of the company-specific risk be diversified away by investing in both Lumia and Gold Rain 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 Gold Rain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Gold Rain Enterprises, you can compare the effects of market volatilities on Lumia and Gold Rain 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 Gold Rain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Gold Rain.
Diversification Opportunities for Lumia and Gold Rain
Very weak diversification
The 3 months correlation between Lumia and Gold is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Gold Rain Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Rain Enterprises 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 Gold Rain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Rain Enterprises has no effect on the direction of Lumia i.e., Lumia and Gold Rain go up and down completely randomly.
Pair Corralation between Lumia and Gold Rain
Assuming the 90 days trading horizon Lumia is expected to generate 14.75 times more return on investment than Gold Rain. However, Lumia is 14.75 times more volatile than Gold Rain Enterprises. It trades about 0.04 of its potential returns per unit of risk. Gold Rain Enterprises is currently generating about 0.04 per unit of risk. If you would invest 0.00 in Lumia on October 14, 2024 and sell it today you would earn a total of 118.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.16% |
| Values | Daily Returns |
Lumia vs. Gold Rain Enterprises
Performance |
| Timeline |
| Lumia |
| Gold Rain Enterprises |
Lumia and Gold Rain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Gold Rain
The main advantage of trading using opposite Lumia and Gold Rain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Gold Rain 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 Gold Rain will offset losses from the drop in Gold Rain's long position.The idea behind Lumia and Gold Rain Enterprises 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.| Gold Rain vs. AVerMedia Technologies | Gold Rain vs. Min Aik Technology | Gold Rain vs. Uniform Industrial Corp | Gold Rain vs. Information Technology Total |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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