Correlation Between Lumia and Gulf Resources
Can any of the company-specific risk be diversified away by investing in both Lumia and Gulf Resources 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 Gulf Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Gulf Resources, you can compare the effects of market volatilities on Lumia and Gulf Resources 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 Gulf Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Gulf Resources.
Diversification Opportunities for Lumia and Gulf Resources
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lumia and Gulf is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Gulf Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Resources 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 Gulf Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Resources has no effect on the direction of Lumia i.e., Lumia and Gulf Resources go up and down completely randomly.
Pair Corralation between Lumia and Gulf Resources
Assuming the 90 days trading horizon Lumia is expected to under-perform the Gulf Resources. But the crypto coin apears to be less risky and, when comparing its historical volatility, Lumia is 1.57 times less risky than Gulf Resources. The crypto coin trades about -0.33 of its potential returns per unit of risk. The Gulf Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Gulf Resources on November 2, 2024 and sell it today you would earn a total of 10.00 from holding Gulf Resources or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Lumia vs. Gulf Resources
Performance |
| Timeline |
| Lumia |
| Gulf Resources |
Lumia and Gulf Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Gulf Resources
The main advantage of trading using opposite Lumia and Gulf Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Gulf Resources 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 Gulf Resources will offset losses from the drop in Gulf Resources' long position.The idea behind Lumia and Gulf Resources 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.| Gulf Resources vs. Energy and Environmental | Gulf Resources vs. Alumifuel Pwr Corp | Gulf Resources vs. First Graphene | Gulf Resources vs. ASP Isotopes Common |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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