Correlation Between Lumia and Eneraqua Technologies
Can any of the company-specific risk be diversified away by investing in both Lumia and Eneraqua Technologies 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 Eneraqua Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Eneraqua Technologies PLC, you can compare the effects of market volatilities on Lumia and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Eneraqua Technologies.
Diversification Opportunities for Lumia and Eneraqua Technologies
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lumia and Eneraqua is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies PLC 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Lumia i.e., Lumia and Eneraqua Technologies go up and down completely randomly.
Pair Corralation between Lumia and Eneraqua Technologies
Assuming the 90 days trading horizon Lumia is expected to under-perform the Eneraqua Technologies. In addition to that, Lumia is 2.81 times more volatile than Eneraqua Technologies PLC. It trades about -0.31 of its total potential returns per unit of risk. Eneraqua Technologies PLC is currently generating about -0.01 per unit of volatility. If you would invest 3,850 in Eneraqua Technologies PLC on October 24, 2024 and sell it today you would lose (30.00) from holding Eneraqua Technologies PLC or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Lumia vs. Eneraqua Technologies PLC
Performance |
| Timeline |
| Lumia |
| Eneraqua Technologies PLC |
Lumia and Eneraqua Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Eneraqua Technologies
The main advantage of trading using opposite Lumia and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.The idea behind Lumia and Eneraqua Technologies PLC 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.| Eneraqua Technologies vs. Sparebank 1 SR | Eneraqua Technologies vs. Eastman Chemical Co | Eneraqua Technologies vs. Ion Beam Applications | Eneraqua Technologies vs. Moneta Money Bank |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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