Correlation Between Lupatech and Waste Management
Can any of the company-specific risk be diversified away by investing in both Lupatech and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Waste Management, you can compare the effects of market volatilities on Lupatech and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Waste Management.
Diversification Opportunities for Lupatech and Waste Management
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lupatech and Waste is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Lupatech i.e., Lupatech and Waste Management go up and down completely randomly.
Pair Corralation between Lupatech and Waste Management
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Waste Management. In addition to that, Lupatech is 2.1 times more volatile than Waste Management. It trades about -0.06 of its total potential returns per unit of risk. Waste Management is currently generating about 0.13 per unit of volatility. If you would invest 41,071 in Waste Management on September 14, 2024 and sell it today you would earn a total of 23,520 from holding Waste Management or generate 57.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.57% |
| Values | Daily Returns |
Lupatech SA vs. Waste Management
Performance |
| Timeline |
| Lupatech SA |
| Waste Management |
Lupatech and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Waste Management
The main advantage of trading using opposite Lupatech and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Gafisa SA |
| Waste Management vs. Ambipar Participaes e | Waste Management vs. Fundo Investimento Imobiliario | Waste Management vs. LESTE FDO INV | Waste Management vs. Fras le 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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