Correlation Between Lumia and Lykos Metals
Can any of the company-specific risk be diversified away by investing in both Lumia and Lykos Metals 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 Lykos Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Lykos Metals, you can compare the effects of market volatilities on Lumia and Lykos Metals 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 Lykos Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Lykos Metals.
Diversification Opportunities for Lumia and Lykos Metals
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lumia and Lykos is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Lykos Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lykos Metals 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 Lykos Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lykos Metals has no effect on the direction of Lumia i.e., Lumia and Lykos Metals go up and down completely randomly.
Pair Corralation between Lumia and Lykos Metals
Assuming the 90 days trading horizon Lumia is expected to generate 11.53 times more return on investment than Lykos Metals. However, Lumia is 11.53 times more volatile than Lykos Metals. It trades about 0.06 of its potential returns per unit of risk. Lykos Metals is currently generating about -0.07 per unit of risk. If you would invest 0.00 in Lumia on October 26, 2024 and sell it today you would earn a total of 95.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.47% |
| Values | Daily Returns |
Lumia vs. Lykos Metals
Performance |
| Timeline |
| Lumia |
| Lykos Metals |
Lumia and Lykos Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Lykos Metals
The main advantage of trading using opposite Lumia and Lykos Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Lykos Metals 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 Lykos Metals will offset losses from the drop in Lykos Metals' long position.The idea behind Lumia and Lykos Metals 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.| Lykos Metals vs. Northern Star Resources | Lykos Metals vs. Evolution Mining | Lykos Metals vs. Bluescope Steel | Lykos Metals vs. De Grey Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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