Correlation Between Lumia and Albion Technology
Can any of the company-specific risk be diversified away by investing in both Lumia and Albion Technology 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 Albion Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Albion Technology General, you can compare the effects of market volatilities on Lumia and Albion Technology 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 Albion Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Albion Technology.
Diversification Opportunities for Lumia and Albion Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lumia and Albion is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Albion Technology General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Technology General 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 Albion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Technology General has no effect on the direction of Lumia i.e., Lumia and Albion Technology go up and down completely randomly.
Pair Corralation between Lumia and Albion Technology
Assuming the 90 days trading horizon Lumia is expected to under-perform the Albion Technology. In addition to that, Lumia is 42.48 times more volatile than Albion Technology General. It trades about -0.14 of its total potential returns per unit of risk. Albion Technology General is currently generating about -0.23 per unit of volatility. If you would invest 6,850 in Albion Technology General on October 20, 2024 and sell it today you would lose (50.00) from holding Albion Technology General or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Lumia vs. Albion Technology General
Performance |
| Timeline |
| Lumia |
| Albion Technology General |
Lumia and Albion Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Albion Technology
The main advantage of trading using opposite Lumia and Albion Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Albion Technology 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 Albion Technology will offset losses from the drop in Albion Technology's long position.The idea behind Lumia and Albion Technology General 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.| Albion Technology vs. Tatton Asset Management | Albion Technology vs. JLEN Environmental Assets | Albion Technology vs. Cairo Communication SpA | Albion Technology vs. Jupiter Fund Management |
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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