Correlation Between Investment and LumenRadio
Can any of the company-specific risk be diversified away by investing in both Investment and LumenRadio 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 Investment and LumenRadio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Oresund and LumenRadio AB, you can compare the effects of market volatilities on Investment and LumenRadio 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 Investment with a short position of LumenRadio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and LumenRadio.
Diversification Opportunities for Investment and LumenRadio
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investment and LumenRadio is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund and LumenRadio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LumenRadio AB and 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 Investment AB Oresund are associated (or correlated) with LumenRadio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LumenRadio AB has no effect on the direction of Investment i.e., Investment and LumenRadio go up and down completely randomly.
Pair Corralation between Investment and LumenRadio
Assuming the 90 days trading horizon Investment AB Oresund is expected to generate 1.01 times more return on investment than LumenRadio. However, Investment is 1.01 times more volatile than LumenRadio AB. It trades about -0.01 of its potential returns per unit of risk. LumenRadio AB is currently generating about -0.1 per unit of risk. If you would invest 11,600 in Investment AB Oresund on November 28, 2024 and sell it today you would lose (80.00) from holding Investment AB Oresund or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Oresund vs. LumenRadio AB
Performance |
| Timeline |
| Investment AB Oresund |
| LumenRadio AB |
Investment and LumenRadio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and LumenRadio
The main advantage of trading using opposite Investment and LumenRadio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, LumenRadio 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 LumenRadio will offset losses from the drop in LumenRadio's long position.| Investment vs. Bure Equity AB | Investment vs. Creades AB | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| LumenRadio vs. White Pearl Technology | LumenRadio vs. Skandinaviska Enskilda Banken | LumenRadio vs. Invisio Communications AB | LumenRadio vs. Lundin Mining |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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