Correlation Between Lumia and Grays Leasing
Can any of the company-specific risk be diversified away by investing in both Lumia and Grays Leasing 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 Grays Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Grays Leasing, you can compare the effects of market volatilities on Lumia and Grays Leasing 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 Grays Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Grays Leasing.
Diversification Opportunities for Lumia and Grays Leasing
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumia and Grays is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Lumia i.e., Lumia and Grays Leasing go up and down completely randomly.
Pair Corralation between Lumia and Grays Leasing
Assuming the 90 days trading horizon Lumia is expected to generate 6.64 times more return on investment than Grays Leasing. However, Lumia is 6.64 times more volatile than Grays Leasing. It trades about 0.04 of its potential returns per unit of risk. Grays Leasing is currently generating about 0.06 per unit of risk. If you would invest 0.00 in Lumia on November 2, 2024 and sell it today you would earn a total of 87.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 48.54% |
| Values | Daily Returns |
Lumia vs. Grays Leasing
Performance |
| Timeline |
| Lumia |
| Grays Leasing |
Lumia and Grays Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Grays Leasing
The main advantage of trading using opposite Lumia and Grays Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Grays Leasing 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 Grays Leasing will offset losses from the drop in Grays Leasing's long position.The idea behind Lumia and Grays Leasing 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.| Grays Leasing vs. Masood Textile Mills | Grays Leasing vs. Fauji Foods | Grays Leasing vs. KSB Pumps | Grays Leasing vs. Mari Petroleum |
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 Stocks Directory module to find actively traded stocks across global markets.
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