Correlation Between Lumia and Theranexus
Can any of the company-specific risk be diversified away by investing in both Lumia and Theranexus 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 Theranexus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Theranexus SA, you can compare the effects of market volatilities on Lumia and Theranexus 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 Theranexus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Theranexus.
Diversification Opportunities for Lumia and Theranexus
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lumia and Theranexus is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Theranexus SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theranexus SA 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 Theranexus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theranexus SA has no effect on the direction of Lumia i.e., Lumia and Theranexus go up and down completely randomly.
Pair Corralation between Lumia and Theranexus
Assuming the 90 days trading horizon Lumia is expected to generate 7.78 times more return on investment than Theranexus. However, Lumia is 7.78 times more volatile than Theranexus SA. It trades about 0.04 of its potential returns per unit of risk. Theranexus SA is currently generating about -0.01 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 | Very Weak |
| Accuracy | 98.05% |
| Values | Daily Returns |
Lumia vs. Theranexus SA
Performance |
| Timeline |
| Lumia |
| Theranexus SA |
Lumia and Theranexus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Theranexus
The main advantage of trading using opposite Lumia and Theranexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Theranexus 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 Theranexus will offset losses from the drop in Theranexus' long position.The idea behind Lumia and Theranexus 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.| Theranexus vs. Quantum Genomics SA | Theranexus vs. Biophytis SA | Theranexus vs. Gensight Biologics SA | Theranexus vs. Poxel SA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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