Correlation Between Topicus and Lumine
Can any of the company-specific risk be diversified away by investing in both Topicus and Lumine 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 Topicus and Lumine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Topicus and Lumine Group, you can compare the effects of market volatilities on Topicus and Lumine 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 Topicus with a short position of Lumine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topicus and Lumine.
Diversification Opportunities for Topicus and Lumine
Very good diversification
The 3 months correlation between Topicus and Lumine is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Topicus and Lumine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumine Group and Topicus 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 Topicus are associated (or correlated) with Lumine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumine Group has no effect on the direction of Topicus i.e., Topicus and Lumine go up and down completely randomly.
Pair Corralation between Topicus and Lumine
Assuming the 90 days horizon Topicus is expected to generate 6.63 times less return on investment than Lumine. But when comparing it to its historical volatility, Topicus is 1.3 times less risky than Lumine. It trades about 0.01 of its potential returns per unit of risk. Lumine Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,290 in Lumine Group on November 2, 2024 and sell it today you would earn a total of 530.00 from holding Lumine Group or generate 16.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Topicus vs. Lumine Group
Performance |
| Timeline |
| Topicus |
| Lumine Group |
Topicus and Lumine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Topicus and Lumine
The main advantage of trading using opposite Topicus and Lumine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topicus position performs unexpectedly, Lumine 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 Lumine will offset losses from the drop in Lumine's long position.| Topicus vs. Constellation Software | Topicus vs. Converge Technology Solutions | Topicus vs. Enghouse Systems | Topicus vs. Dye Durham |
| Lumine vs. Topicus | Lumine vs. Constellation Software | Lumine vs. Brookfield | Lumine vs. Brookfield Asset Management |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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