Correlation Between Lumia and SEED
Can any of the company-specific risk be diversified away by investing in both Lumia and SEED 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 SEED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and SEED LIMITED, you can compare the effects of market volatilities on Lumia and SEED 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 SEED. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and SEED.
Diversification Opportunities for Lumia and SEED
Pay attention - limited upside
The 3 months correlation between Lumia and SEED is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and SEED LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEED LIMITED 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 SEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEED LIMITED has no effect on the direction of Lumia i.e., Lumia and SEED go up and down completely randomly.
Pair Corralation between Lumia and SEED
Assuming the 90 days trading horizon Lumia is expected to generate 5.62 times more return on investment than SEED. However, Lumia is 5.62 times more volatile than SEED LIMITED. It trades about 0.04 of its potential returns per unit of risk. SEED LIMITED is currently generating about 0.02 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 88.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 77.78% |
| Values | Daily Returns |
Lumia vs. SEED LIMITED
Performance |
| Timeline |
| Lumia |
| SEED LIMITED |
Lumia and SEED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and SEED
The main advantage of trading using opposite Lumia and SEED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, SEED 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 SEED will offset losses from the drop in SEED's long position.The idea behind Lumia and SEED 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.| SEED vs. FIRST MUTUAL PROPERTIES | SEED vs. BRITISH AMERICAN TOBACCO | SEED vs. TANGANDA TEA PANY | SEED vs. ZB FINANCIAL HOLDINGS |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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