Correlation Between Lumia and Patria Investments
Can any of the company-specific risk be diversified away by investing in both Lumia and Patria Investments 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 Patria Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Patria Investments Limited, you can compare the effects of market volatilities on Lumia and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Patria Investments.
Diversification Opportunities for Lumia and Patria Investments
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lumia and Patria is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Lumia i.e., Lumia and Patria Investments go up and down completely randomly.
Pair Corralation between Lumia and Patria Investments
Assuming the 90 days trading horizon Lumia is expected to under-perform the Patria Investments. In addition to that, Lumia is 4.69 times more volatile than Patria Investments Limited. It trades about -0.37 of its total potential returns per unit of risk. Patria Investments Limited is currently generating about -0.26 per unit of volatility. If you would invest 3,812 in Patria Investments Limited on October 14, 2024 and sell it today you would lose (244.00) from holding Patria Investments Limited or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Lumia vs. Patria Investments Limited
Performance |
| Timeline |
| Lumia |
| Patria Investments |
Lumia and Patria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Patria Investments
The main advantage of trading using opposite Lumia and Patria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Patria Investments 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 Patria Investments will offset losses from the drop in Patria Investments' long position.The idea behind Lumia and Patria Investments Limited 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.| Patria Investments vs. Fair Isaac | Patria Investments vs. United Airlines Holdings | Patria Investments vs. Westinghouse Air Brake | Patria Investments vs. SK Telecom Co, |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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