Correlation Between Lupatech and Wetzel SA
Can any of the company-specific risk be diversified away by investing in both Lupatech and Wetzel SA 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 Wetzel SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Wetzel SA, you can compare the effects of market volatilities on Lupatech and Wetzel SA 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 Wetzel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Wetzel SA.
Diversification Opportunities for Lupatech and Wetzel SA
Very good diversification
The 3 months correlation between Lupatech and Wetzel is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Wetzel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetzel SA 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 Wetzel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetzel SA has no effect on the direction of Lupatech i.e., Lupatech and Wetzel SA go up and down completely randomly.
Pair Corralation between Lupatech and Wetzel SA
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Wetzel SA. But the stock apears to be less risky and, when comparing its historical volatility, Lupatech SA is 3.72 times less risky than Wetzel SA. The stock trades about -0.09 of its potential returns per unit of risk. The Wetzel SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 910.00 in Wetzel SA on August 26, 2024 and sell it today you would earn a total of 340.00 from holding Wetzel SA or generate 37.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lupatech SA vs. Wetzel SA
Performance |
| Timeline |
| Lupatech SA |
| Wetzel SA |
Lupatech and Wetzel SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Wetzel SA
The main advantage of trading using opposite Lupatech and Wetzel SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, Wetzel SA 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 Wetzel SA will offset losses from the drop in Wetzel SA's long position.| Lupatech vs. Mitsubishi UFJ Financial | Lupatech vs. Sumitomo Mitsui Financial | Lupatech vs. Toyota Motor | Lupatech vs. Banco Santander Chile |
| Wetzel SA vs. Recrusul SA | Wetzel SA vs. Mangels Industrial SA | Wetzel SA vs. Inepar SA Indstria | Wetzel SA vs. Lupatech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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