Correlation Between Lumia and Gestamp Automocin
Can any of the company-specific risk be diversified away by investing in both Lumia and Gestamp Automocin 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 Gestamp Automocin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Gestamp Automocin SA, you can compare the effects of market volatilities on Lumia and Gestamp Automocin 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 Gestamp Automocin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Gestamp Automocin.
Diversification Opportunities for Lumia and Gestamp Automocin
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lumia and Gestamp is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Gestamp Automocin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gestamp Automocin 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 Gestamp Automocin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gestamp Automocin has no effect on the direction of Lumia i.e., Lumia and Gestamp Automocin go up and down completely randomly.
Pair Corralation between Lumia and Gestamp Automocin
Assuming the 90 days trading horizon Lumia is expected to under-perform the Gestamp Automocin. In addition to that, Lumia is 3.53 times more volatile than Gestamp Automocin SA. It trades about -0.14 of its total potential returns per unit of risk. Gestamp Automocin SA is currently generating about 0.07 per unit of volatility. If you would invest 234.00 in Gestamp Automocin SA on October 20, 2024 and sell it today you would earn a total of 5.00 from holding Gestamp Automocin SA or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Lumia vs. Gestamp Automocin SA
Performance |
| Timeline |
| Lumia |
| Gestamp Automocin |
Lumia and Gestamp Automocin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Gestamp Automocin
The main advantage of trading using opposite Lumia and Gestamp Automocin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Gestamp Automocin 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 Gestamp Automocin will offset losses from the drop in Gestamp Automocin's long position.The idea behind Lumia and Gestamp Automocin SA 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.| Gestamp Automocin vs. SIERRA METALS | Gestamp Automocin vs. JD SPORTS FASH | Gestamp Automocin vs. CARDINAL HEALTH | Gestamp Automocin vs. Transport International Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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