Correlation Between LUX ISLAND and SUN
Can any of the company-specific risk be diversified away by investing in both LUX ISLAND and SUN 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 SUN 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 SUN LIMITED, you can compare the effects of market volatilities on LUX ISLAND and SUN 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 SUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUX ISLAND and SUN.
Diversification Opportunities for LUX ISLAND and SUN
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LUX and SUN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LUX ISLAND RESORTS and SUN LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN LIMITED 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 SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN LIMITED has no effect on the direction of LUX ISLAND i.e., LUX ISLAND and SUN go up and down completely randomly.
Pair Corralation between LUX ISLAND and SUN
Assuming the 90 days trading horizon LUX ISLAND RESORTS is expected to generate 0.33 times more return on investment than SUN. However, LUX ISLAND RESORTS is 2.99 times less risky than SUN. It trades about 0.03 of its potential returns per unit of risk. SUN LIMITED is currently generating about 0.0 per unit of risk. If you would invest 5,250 in LUX ISLAND RESORTS on September 2, 2024 and sell it today you would earn a total of 250.00 from holding LUX ISLAND RESORTS or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LUX ISLAND RESORTS vs. SUN LIMITED
Performance |
| Timeline |
| LUX ISLAND RESORTS |
| SUN LIMITED |
LUX ISLAND and SUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LUX ISLAND and SUN
The main advantage of trading using opposite LUX ISLAND and SUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LUX ISLAND position performs unexpectedly, SUN 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 SUN will offset losses from the drop in SUN'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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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