Correlation Between LUX ISLAND and CAUDAN DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both LUX ISLAND and CAUDAN DEVELOPMENT 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 LUX ISLAND and CAUDAN DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LUX ISLAND RESORTS and CAUDAN DEVELOPMENT LTD, you can compare the effects of market volatilities on LUX ISLAND and CAUDAN DEVELOPMENT 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 LUX ISLAND with a short position of CAUDAN DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUX ISLAND and CAUDAN DEVELOPMENT.
Diversification Opportunities for LUX ISLAND and CAUDAN DEVELOPMENT
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LUX and CAUDAN is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LUX ISLAND RESORTS and CAUDAN DEVELOPMENT LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAUDAN DEVELOPMENT LTD and LUX ISLAND 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 LUX ISLAND RESORTS are associated (or correlated) with CAUDAN DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAUDAN DEVELOPMENT LTD has no effect on the direction of LUX ISLAND i.e., LUX ISLAND and CAUDAN DEVELOPMENT go up and down completely randomly.
Pair Corralation between LUX ISLAND and CAUDAN DEVELOPMENT
Assuming the 90 days trading horizon LUX ISLAND RESORTS is expected to generate 0.34 times more return on investment than CAUDAN DEVELOPMENT. However, LUX ISLAND RESORTS is 2.96 times less risky than CAUDAN DEVELOPMENT. It trades about 0.03 of its potential returns per unit of risk. CAUDAN DEVELOPMENT LTD is currently generating about 0.01 per unit of risk. If you would invest 4,774 in LUX ISLAND RESORTS on September 2, 2024 and sell it today you would earn a total of 726.00 from holding LUX ISLAND RESORTS or generate 15.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.66% |
| Values | Daily Returns |
LUX ISLAND RESORTS vs. CAUDAN DEVELOPMENT LTD
Performance |
| Timeline |
| LUX ISLAND RESORTS |
| CAUDAN DEVELOPMENT LTD |
LUX ISLAND and CAUDAN DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LUX ISLAND and CAUDAN DEVELOPMENT
The main advantage of trading using opposite LUX ISLAND and CAUDAN DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LUX ISLAND position performs unexpectedly, CAUDAN DEVELOPMENT 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 CAUDAN DEVELOPMENT will offset losses from the drop in CAUDAN DEVELOPMENT's long position.| LUX ISLAND vs. FINCORP INVESTMENT LTD | LUX ISLAND vs. MCB GROUP LTD | LUX ISLAND vs. CAUDAN DEVELOPMENT LTD | LUX ISLAND vs. NEW MAURITIUS HOTELS |
| CAUDAN DEVELOPMENT vs. FINCORP INVESTMENT LTD | CAUDAN DEVELOPMENT vs. MCB GROUP LTD | CAUDAN DEVELOPMENT vs. LUX ISLAND RESORTS | CAUDAN DEVELOPMENT vs. NEW MAURITIUS HOTELS |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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