Correlation Between Lupatech and Mangels Industrial
Can any of the company-specific risk be diversified away by investing in both Lupatech and Mangels Industrial 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 Mangels Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Mangels Industrial SA, you can compare the effects of market volatilities on Lupatech and Mangels Industrial 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 Mangels Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Mangels Industrial.
Diversification Opportunities for Lupatech and Mangels Industrial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lupatech and Mangels is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial 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 Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of Lupatech i.e., Lupatech and Mangels Industrial go up and down completely randomly.
Pair Corralation between Lupatech and Mangels Industrial
Assuming the 90 days trading horizon Lupatech SA is expected to generate 0.65 times more return on investment than Mangels Industrial. However, Lupatech SA is 1.55 times less risky than Mangels Industrial. It trades about -0.03 of its potential returns per unit of risk. Mangels Industrial SA is currently generating about -0.1 per unit of risk. If you would invest 142.00 in Lupatech SA on October 24, 2024 and sell it today you would lose (15.00) from holding Lupatech SA or give up 10.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupatech SA vs. Mangels Industrial SA
Performance |
| Timeline |
| Lupatech SA |
| Mangels Industrial |
Lupatech and Mangels Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Mangels Industrial
The main advantage of trading using opposite Lupatech and Mangels Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, Mangels Industrial 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 Mangels Industrial will offset losses from the drop in Mangels Industrial's long position.| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit SA |
| Mangels Industrial vs. Inepar SA Indstria | Mangels Industrial vs. Lupatech SA | Mangels Industrial vs. Paranapanema SA | Mangels Industrial vs. Plascar Participaes Industriais |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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