Correlation Between Lupatech and MAHLE Metal
Can any of the company-specific risk be diversified away by investing in both Lupatech and MAHLE Metal 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 Lupatech and MAHLE Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and MAHLE Metal Leve, you can compare the effects of market volatilities on Lupatech and MAHLE Metal 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 Lupatech with a short position of MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and MAHLE Metal.
Diversification Opportunities for Lupatech and MAHLE Metal
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lupatech and MAHLE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve and Lupatech 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 Lupatech SA are associated (or correlated) with MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Lupatech i.e., Lupatech and MAHLE Metal go up and down completely randomly.
Pair Corralation between Lupatech and MAHLE Metal
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the MAHLE Metal. In addition to that, Lupatech is 1.18 times more volatile than MAHLE Metal Leve. It trades about -0.03 of its total potential returns per unit of risk. MAHLE Metal Leve is currently generating about 0.04 per unit of volatility. If you would invest 1,981 in MAHLE Metal Leve on August 30, 2024 and sell it today you would earn a total of 735.00 from holding MAHLE Metal Leve or generate 37.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupatech SA vs. MAHLE Metal Leve
Performance |
| Timeline |
| Lupatech SA |
| MAHLE Metal Leve |
Lupatech and MAHLE Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and MAHLE Metal
The main advantage of trading using opposite Lupatech and MAHLE Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, MAHLE Metal 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 MAHLE Metal will offset losses from the drop in MAHLE Metal's long position.| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit SA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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