Correlation Between Lowland Investment and London Security
Can any of the company-specific risk be diversified away by investing in both Lowland Investment and London Security 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 Lowland Investment and London Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowland Investment Co and London Security Plc, you can compare the effects of market volatilities on Lowland Investment and London Security 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 Lowland Investment with a short position of London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowland Investment and London Security.
Diversification Opportunities for Lowland Investment and London Security
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lowland and London is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lowland Investment Co and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security Plc and Lowland Investment 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 Lowland Investment Co are associated (or correlated) with London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Lowland Investment i.e., Lowland Investment and London Security go up and down completely randomly.
Pair Corralation between Lowland Investment and London Security
Assuming the 90 days trading horizon Lowland Investment is expected to generate 1.3 times less return on investment than London Security. But when comparing it to its historical volatility, Lowland Investment Co is 1.16 times less risky than London Security. It trades about 0.07 of its potential returns per unit of risk. London Security Plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 294,207 in London Security Plc on November 3, 2024 and sell it today you would earn a total of 65,793 from holding London Security Plc or generate 22.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Lowland Investment Co vs. London Security Plc
Performance |
| Timeline |
| Lowland Investment |
| London Security Plc |
Lowland Investment and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowland Investment and London Security
The main advantage of trading using opposite Lowland Investment and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowland Investment position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| Lowland Investment vs. Inspiration Healthcare Group | Lowland Investment vs. Young Cos Brewery | Lowland Investment vs. Fevertree Drinks Plc | Lowland Investment vs. Worldwide Healthcare Trust |
| London Security vs. Edita Food Industries | London Security vs. Nordic Semiconductor ASA | London Security vs. Associated British Foods | London Security vs. Ebro Foods |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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