Correlation Between Lumia and MERCK Kommanditgesells
Can any of the company-specific risk be diversified away by investing in both Lumia and MERCK Kommanditgesells 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 MERCK Kommanditgesells into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and MERCK Kommanditgesellschaft auf, you can compare the effects of market volatilities on Lumia and MERCK Kommanditgesells 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 MERCK Kommanditgesells. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and MERCK Kommanditgesells.
Diversification Opportunities for Lumia and MERCK Kommanditgesells
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lumia and MERCK is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and MERCK Kommanditgesellschaft au in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK Kommanditgesells 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 MERCK Kommanditgesells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK Kommanditgesells has no effect on the direction of Lumia i.e., Lumia and MERCK Kommanditgesells go up and down completely randomly.
Pair Corralation between Lumia and MERCK Kommanditgesells
Assuming the 90 days trading horizon Lumia is expected to generate 52.18 times more return on investment than MERCK Kommanditgesells. However, Lumia is 52.18 times more volatile than MERCK Kommanditgesellschaft auf. It trades about 0.12 of its potential returns per unit of risk. MERCK Kommanditgesellschaft auf is currently generating about -0.01 per unit of risk. If you would invest 0.00 in Lumia on November 1, 2024 and sell it today you would earn a total of 91.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.19% |
| Values | Daily Returns |
Lumia vs. MERCK Kommanditgesellschaft au
Performance |
| Timeline |
| Lumia |
| MERCK Kommanditgesells |
Lumia and MERCK Kommanditgesells Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and MERCK Kommanditgesells
The main advantage of trading using opposite Lumia and MERCK Kommanditgesells positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, MERCK Kommanditgesells 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 MERCK Kommanditgesells will offset losses from the drop in MERCK Kommanditgesells' long position.The idea behind Lumia and MERCK Kommanditgesellschaft auf 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.| MERCK Kommanditgesells vs. Greater Cannabis | MERCK Kommanditgesells vs. Merck KGaA ADR | MERCK Kommanditgesells vs. For The Earth | MERCK Kommanditgesells vs. Indo Global Exchange |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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